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Will Delayed Retirement by the Baby Boomers Lead to Higher Unemployment Among Younger Workers?

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  • Alicia H. Munnell
  • Rebecca April Yanyuan Wu

Abstract

Using 1977-2011 data from the Current Population Survey, this paper investigates the often-repeated claim that delayed retirement by baby boomers will result in higher unemployment among the young, a claim which has been garnering increased attention from the media during the Great Recession. It explores both time-series and cross-state variation, and uses state-level regressions and instrumental-variable models to determine the extent to which such “crowding out” exists in the United States. The estimates show no evidence that increasing the employment of older persons reduces the job opportunities or wage rates of younger persons. Indeed, the evidence suggests that greater employment of older persons leads to better outcomes for the young in the form of reduced unemployment, increased employment, and a higher wage. The patterns are consistent for both men and women and for groups with different levels of education. Estimates using elderly male mortality rates as instrumental variables also produce no consistent evidence that changes in the employment rates of older workers adversely affect the employment and wage rate of their younger counterparts. If anything, the opposite is true. Finally, despite the fact that the labor market downturn that accompanied the Great Recession was the most severe experienced in the post-war era, the effects of elderly employment on other segments of the labor market do not differ from those during typical business cycles.

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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2012-22.

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Length: 51 pages
Date of creation: Oct 2012
Date of revision: Oct 2012
Handle: RePEc:crr:crrwps:wp2012-22

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Cited by:
  1. Eichhorst, Werner & Boeri, Tito & Braga, Michela & De Coen, An & Galasso, Vincenzo & Gerard, Maarten & Kendzia, Michael J. & Mayrhuber, Christine & Pedersen, Jakob Louis & Schmidl, Ricarda & Steiber, , 2013. "Report No. 53: Combining the Entry of Young People in the Labour Market with the Retention of Older Workers," IZA Research Reports 53, Institute for the Study of Labor (IZA).

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