The Effects of Cohort Size on European Earnings
AbstractI use the cross-country and time variation in the demographic structure of 11 European countries to study how changes in cohort size affect real earnings in Europe. This is an important question in the light of widespread population ageing. I find that cohort size has a negative and statistically significant effect on earnings, and that this effect is larger for the older age group - aged between 35 and 54 - than for the younger group - aged 20 to 34. I also find that earnings are more sensible to changes in cohort size in Southern Europe, which points to a lower degree of substitutability between individuals with the same education but different age. I argue that the uncovered lower substitutability in the Olive Belt of Europe is in line with the higher employment protection that its workers enjoy, at least compared to the workers located in Northern Europe. One important policy implication of this study is that the demographic shift away from the young and toward the old, a baby bust after a baby boom, is likely to tilt age - earnings profiles in favor of the young more in Southern than in Northern Europe.
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Bibliographic InfoPaper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0036.
Length: 29 pages
Date of creation: Jan 2007
Date of revision:
Cohort size; wages; Europe;
Other versions of this item:
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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