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

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Author Info
Agar Brugiavini () (Department of Economics, University Of Venice Cà Foscari)
Franco Peracchi (University of Rome “Tor Vergata”)

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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.

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Publisher Info
Paper provided by University of Venice "Ca' Foscari", Department of Economics in its series Working Papers with number 2008_45.

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Length: 54
Date of creation: 2008
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Handle: RePEc:ven:wpaper:2008_45

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Related research
Keywords: lump of labour; youth unemployment; early retirement;

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Find related papers by 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, and Vacancies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June. [Downloadable!] (restricted)
  2. Bertola, Giuseppe, 1999. "Microeconomic perspectives on aggregate labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 45, pages 2985-3028 Elsevier. [Downloadable!] (restricted)
  3. Agar Brugiavini & Franco Peracchi, 2003. "Social Security Wealth and Retirement Decisions in Italy," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 17(SpecialIs), pages 79-114, 08. [Downloadable!] (restricted)
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  4. Michele Boldrin & Juan J. Dolado & Juan F. Jimeno & Franco Peracchi, 1999. "The future of pensions in Europe," Economic Policy, CEPR, CES, MSH, vol. 14(29), pages 287-320, October. [Downloadable!] (restricted)
  5. Graziella Caselli & Franco Peracchi & Elisabetta Barbi & Rosa Maria Lipsi, 2003. "Differential Mortality and the Design of the Italian System of Public Pensions," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 17(SpecialIs), pages 45-78, 08. [Downloadable!] (restricted)
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  6. Agar Brugiavini & Franco Peracchi, 2001. "Micro Modeling Of Retirement Behavior In Italy," Departmental Working Papers 147, Tor Vergata University, CEIS. [Downloadable!]
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  7. Agar Brugiavini & Franco Peracchi, 2008. "Fiscal Implications of Pension Reforms in Italy," Working Papers 2008_30, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
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  8. Floro Ernesto Caroleo & Fernanda Mazzotta, 1998. "Youth Unemployment and Youth Employment Policies in Italy," CELPE Discussion Papers 45, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  9. Jonathan Gruber & David A. Wise, 2002. "Social Security Programs and Retirement Around the World: Micro Estimation," NBER Working Papers 9407, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: a Honeymoon Effect?," Economic Journal, Royal Economic Society, vol. 117(521), pages 357-385, 06. [Downloadable!] (restricted)
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