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Youth Unemployment and Retirement of the Elderly: the Case of Italy

Author

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  • Agar Brugiavini

    (Department of Economics, University Of Venice C� Foscari)

  • Franco Peracchi

    (University of Rome �Tor Vergata�)

Abstract

This paper shows that the �lump of labor� assumption fails in Italy. The direct relationship between the unemployment rate of the young and the labor force participation of the old is pro-cyclical, i.e. a higher labor force participation of the old is related to a lower unemployment rate of the young. Hence both vary with the business cycle. In order to overcome endogeneity problems in explaining unemployment of the young, we resort to a simulated variable: �the inducement to retire�, which is constructed by simulating the social security benefits. We related the unemployment rate of the young to this incentive measure and find that a higher inducement to retire is associated to a higher unemployment rate � quite the opposite of the �young-in-old-out� story.

Suggested Citation

  • Agar Brugiavini & Franco Peracchi, 2008. "Youth Unemployment and Retirement of the Elderly: the Case of Italy," Working Papers 2008_45, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2008_45
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    References listed on IDEAS

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    1. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
    2. Gruber, Jonathan & Wise, David A. (ed.), 2004. "Social Security Programs and Retirement around the World," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226310183, December.
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    4. Agar Brugiavini & Franco Peracchi, 2007. "Fiscal Implications of Pension Reforms in Italy," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 253-294, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Piotr Ciżkowicz & Michał Kowalczuk & Andrzej Rzońca, 2016. "Heterogeneous determinants of local unemployment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 28(4), pages 487-519, October.
    2. Floro Ernesto Caroleo, 2012. "Il difficile passaggio verso il lavoro dei giovani che lasciano la scuola: Quali possibili politiche?," Discussion Papers 5_2012, CRISEI, University of Naples "Parthenope", Italy.
    3. Bertoni, Marco & Brunello, Giorgio, 2017. "Does Delayed Retirement Affect Youth Employment? Evidence from Italian Local Labour Markets," IZA Discussion Papers 10733, Institute of Labor Economics (IZA).
    4. Murrugarra, Edmundo, 2011. "Employability and productivity among older workers : apolicy framework and evidence from Latin America," Social Protection Discussion Papers and Notes 63230, The World Bank.

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    More about this item

    Keywords

    lump of labour; youth unemployment; early retirement;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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