Labor Force Participation by the Elderly and Employment of the Young

Melika Ben Salem, Didier Blanchet, Antoine Bozio and Muriel Roger

in Social Security Programs and Retirement around the World

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226309484
Published online February 2013 | e-ISBN: 9780226309507 | DOI:
Labor Force Participation by the Elderly and Employment of the Young

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One of the justifications provided for early retirement policies in developed countries is the idea that such policies can facilitate access to the labor market for younger people and help lower global unemployment. This chapter aims to study the long-term relationship between labor force participation (LFP) of the old and unemployment of the young. Employment rates for all age groups are influenced by general labor market conditions and this leads to spurious correlation due to a simultaneity issue. Concerning the evolution of opinions on the retirement/labor market relationship, the idea that Malthusian policies are an efficient answer to labor market disequilibrium has significantly lost ground. This applies both to early retirement policies and to other Malthusian policies such as working time reduction. Establishing a causal relationship of the reduction of labor force participation of the old on employment prospects of the young is indeed challenging work.

Keywords: labor market; retirement policies; employment rates; unemployment; young

Chapter.  11824 words.  Illustrated.

Subjects: Public Economics

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