Social Security Incentives, Exit from the Workforce, and Entry of the Young

Michele Boldrin, Pilar García-Gómez and Sergi Jiménez-Martín

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:
Social Security Incentives, Exit from the Workforce, and Entry of the Young

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Spain has witnessed dramatic social, economic, and demographic changes. Life expectancy has increased substantially, and fertility rates have dropped to some of the lowest levels in the European Union (EU). Policies that favor early retirement are supported and promoted with the justification that they may induce a reduction in youth unemployment rates. The basic idea is that because jobs are a scarce resource available in a fixed number, retiring an older worker would free the same job for a younger, most likely unemployed, one. The goal of this chapter is to understand the relationship between the employment of the old and the employment/unemployment of the young. It estimates the statistical impact of the labor force participation (LFP) of the old on the employment/unemployment of the young, and also of the middle-aged individuals. There exists a positive relationship between the labor force participation of older workers and the employment rate of prime age individuals, while the association between unemployment and labor force participation is negative.

Keywords: social security; workforce; employment; young; Spain

Chapter.  11640 words.  Illustrated.

Subjects: Public Economics

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