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How Longer Work Lives Ease the Crunch of Population Aging

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  • Nicole Maestas
  • Julie Zissimopoulos

Abstract

Population aging is not a looming crisis of the future -- it is already here. Economic challenges arise when the increase in people surviving to old age and the decline in the number of young people alive to support them cause the growth in society's consumption needs to outpace growth in its productive capacity. The ultimate impact of population aging on our standard of living in the future depends a great deal on how long people choose to work before they retire from the labor force. Here, there is reason for optimism. A constellation of forces, some just now gaining momentum, has raised labor force participation at older ages at just the time it is needed. We examine the most important factors behind the increase in labor force participation realized to date: the shift in the skill composition of the workforce, and technological change. We argue that forces such as changes in the structure of employer-provided pensions and Social Security are likely to propel future increases in labor force participation at older ages. The labor market is accommodating older workers to some degree, and older men and women are themselves adapting on a number of fronts, which could substantially lessen the economic impact of population aging. Age-related health declines and the reluctance of employers to hire and retain older workers present challenges, but the outlook for future gains in labor force participation at older ages is promising.

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 24 (2010)
Issue (Month): 1 (Winter)
Pages: 139-60

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Handle: RePEc:aea:jecper:v:24:y:2010:i:1:p:139-60

Note: DOI: 10.1257/jep.24.1.139
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Citations

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Cited by:
  1. Chinhui Juhn & Kristin McCue, 2012. "Workplace Characteristics and Employment of Older Workers," Working Papers 12-31, Center for Economic Studies, U.S. Census Bureau.
  2. Robert Clark & Melinda Morrill, 2013. "Increasing Work Life: The Role Of The Employer," Discussion Papers, Stanford Institute for Economic Policy Research 13-016, Stanford Institute for Economic Policy Research.
  3. Murrugarra, Edmundo, 2011. "Employability and productivity among older workers : apolicy framework and evidence from Latin America," Social Protection Discussion Papers 63230, The World Bank.
  4. Lefebvre, Pierre & Merrigan, Philip & Michaud, Pierre-Carl, 2011. "The Recent Evolution of Retirement Patterns in Canada," IZA Discussion Papers 5979, Institute for the Study of Labor (IZA).
  5. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2014. "Technical progress, retraining cost and early retirement," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 963, Bank of Italy, Economic Research and International Relations Area.
  6. Larsen, Mona & Pedersen, Peder J., 2012. "Paid Work after Retirement: Recent Trends in Denmark," IZA Discussion Papers 6537, Institute for the Study of Labor (IZA).
  7. Ricky Kanabar, 2012. "Unretirement in England: An empirical perspective," Discussion Papers, Department of Economics, University of York 12/31, Department of Economics, University of York.
  8. Nicole Maestas & Kathleen Mullen & David Powell, 2013. "The Effect of Local Labor Demand Conditions on the Labor Supply Outcomes of Older Americans," Discussion Papers, Stanford Institute for Economic Policy Research 13-014, Stanford Institute for Economic Policy Research.
  9. Fairlie, Robert W. & Kapur, Kanika & Gates, Susan, 2013. "Job Lock: Evidence from a Regression Discontinuity Design," IZA Discussion Papers 7785, Institute for the Study of Labor (IZA).
  10. Maria Casanova, 2012. "Wage and Earnings Profiles at Older Ages," Working Papers, Human Capital and Economic Opportunity Working Group 2012-001, Human Capital and Economic Opportunity Working Group.
  11. Seok Gil Park, 2012. "Quantifying Impact of Aging Population on Fiscal Space," IMF Working Papers 12/164, International Monetary Fund.
  12. Emma Gorman & Grant M Scobie & Andy Towers, 2012. "Health and Retirement of Older New Zealanders," Treasury Working Paper Series 12/02, New Zealand Treasury.
  13. Maria Casanova, 2012. "Wage and Earnings Profiles at Older Ages," 2012 Meeting Papers, Society for Economic Dynamics 1166, Society for Economic Dynamics.

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