The Effects of Early Retirement on Youth Unemployment

Alain Jousten, Mathieu Lefébvre, Sergio Perelman and Pierre Pestieau

in Social Security Programs and Retirement around the World

Published by University of Chicago Press

Published in print October 2007 | ISBN: 9780226310176
Published online February 2013 | e-ISBN: 9780226310008 | DOI:
The Effects of Early Retirement on Youth Unemployment

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Belgium is characterized by a relatively high rate of unemployment of the young and a low rate of activity of elderly workers. The latter is the consequence of high incentives to exit the labor force and these incentives are generally justified in the name of fostering youth employment. This chapter tests the validity of such a belief. Section 1.2 begins by giving some institutional background on the systems and regimes applicable to the older workers, as well as some specifically applicable to the young. Section 1.3 presents theoretical arguments regarding both early retirement and youth unemployment. Section 1.4 provides a description of the data. Section 1.5 estimates the effect of incentive variables on activity rates, and documents the overall weak impact of parameters regarding the old on behavior of the young. Section 1.6 contains an alternative and more comprehensive specification for the existing difference between sex groups, and Section 1.7 draws conclusions. The results indicate that there is no clear positive link between the fall of labor force participation of the elderly and youth employment.

Keywords: retirement incentives; older workers; young workers; labor market; youth unemployment; early retirement

Chapter.  9770 words.  Illustrated.

Subjects: Public Economics

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