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Live longer, work longer : making it happen in the labor market

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  • Vodopivec, Milan
  • Dolenc, Primoz

Abstract

The objective of the paper is to summarize labor market implications of population aging and to discuss policy options to increase the employment of old workers. The paper argues that population aging and ensuing shrinking of the workforce will create a significant drag on the economies of developed, transition, and even some developing countries. Thus working longer is an imperative: unless countered by productivity increases, working longer, or both, population aging and ensuing shrinking of labor force will reduce economic growth and may jeopardize the economic well-being of some of the elderly. However, extending working lives has proven difficult, both because workers do not want to work longer and because employers are lukewarm about employment old workers. Among measures to motivate workers to work longer, the paper proposes providing retirement incentives and attractive, flexible working arrangements; and to stimulate employers to hire old workers, it argues for removing obstacles imposed by restrictive labor market institutions, for increasing human capital of workers via life-long learning, and for addressing age discrimination. Chances for extending working lives will also increase with improving health of old workers. The organization of the paper is as follows. Section 1 discusses the implications of population aging for economic growth. Section 2 examines factors that stand in the way of longer working lives - why workers opt for early exit from the labor market, and why employers are often lukewarm about employing old workers. In the policy part of the paper, Section 3 proposes possible measures to attract workers to work longer, and Section 4 describes how to remove institutional obstacles and introduce incentives that would make old workers more appealing to employers.

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Bibliographic Info

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 42471.

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Date of creation: 01 Feb 2008
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Handle: RePEc:wbk:hdnspu:42471

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Keywords: Labor Markets; Health Monitoring&Evaluation; Labor Policies; Work&Working Conditions;

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References

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  1. Orazem, Peter F. & Vodopivec, Milan & Wu, Ruth, 2004. "Worker Displacement during the Transition: Experience from Slovenia," IZA Discussion Papers 1297, Institute for the Study of Labor (IZA).
  2. Macours, Karen & Vakis, Renos, 2008. "Seasonal Migration and Early Childhood Development," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/48, World Institute for Development Economic Research (UNU-WIDER).
  3. Daniel, Kirsten & Heywood, John S., 2007. "The determinants of hiring older workers: UK evidence," Labour Economics, Elsevier, Elsevier, vol. 14(1), pages 35-51, January.
  4. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, Federal Reserve Bank of Chicago, issue Nov, pages 2-20.
  5. Peracchi, Franco & Perotti, Valeria & Scarpetta, Stefano, 2007. "Informality and social protection : preliminary results from pilot surveys in Bulgaria and Colombia," Social Protection Discussion Papers, The World Bank 41541, The World Bank.
  6. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, American Economic Association, vol. 83(4), pages 685-709, September.
  7. Gordon Betcherman & Niels-Hugo Blunch, 2008. "The limited job prospects of displaced workers: evidence from two cities in China," Economic Change and Restructuring, Springer, Springer, vol. 41(3), pages 187-207, September.
  8. Palacios, Robert & Whitehouse, Edward, 2006. "Civil-service pension schemes around the world," MPRA Paper 14796, University Library of Munich, Germany.
  9. Muenz, Rainer, 2007. "Aging and demographic change in European societies : main trends and alternative policy options," Social Protection Discussion Papers, The World Bank 39174, The World Bank.
  10. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(4), pages 482-501, October.
  11. Buddelmeyer, Hielke & Mourre, Gilles & Ward-Warmedinger, Melanie E., 2004. "Recent Developments in Part-Time Work in EU-15 Countries: Trends and Policy," IZA Discussion Papers 1415, Institute for the Study of Labor (IZA).
  12. Lori G. Kletzer & Robert W. Fairlie, 2003. "The long-term costs of job displacement for young adult workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 56(4), pages 682-698, July.
  13. Vodopivec, Milan & Dolenc, Primoz, 2008. "Live longer, work longer : making it happen in the labor market," Social Protection Discussion Papers, The World Bank 42471, The World Bank.
  14. Romain Duval, 2003. "The Retirement Effects of Old-Age Pension and Early Retirement Schemes in OECD Countries," OECD Economics Department Working Papers, OECD Publishing 370, OECD Publishing.
  15. Milazzo, Annamaria & Grosh, Margaret, 2008. "Social safety nets in World Bank lending and analytical work : FY2002 - 2007," Social Protection Discussion Papers, The World Bank 44730, The World Bank.
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