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Labor Force Participation by the Elderly and Employment of the Young: The Case of France

In: Social Security Programs and Retirement around the World: The Relationship to Youth Employment

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  • Melika Ben Salem
  • Didier Blanchet
  • Antoine Bozio
  • Muriel Roger

Abstract

One of the justifications provided for early retirement policies in developed countries is the idea that such policies can facilitate access to the labor market for younger people and help lower global unemployment. But many questions remain on the true effect on young workers of these policies. The objective of the present paper is to study the long term relationship between labor force participation of the old and unemployment of the young in France since the beginning of the 1970s. Establishing causal relationship of the reduction of labor force participation of the old on employment prospect of the young is a challenging work. Evidence of the correlation between youth labor market outcomes and older worker's labor force participation plead more in favor of a positive association between younger and older workers' employment. An increase in the older workers' participation is indeed correlated with an increase in the employment rate of young workers and a decrease in their unemployment rate. Even controlling for the economic cycle, this positive association remains - albeit less robustly. These correlations, based on times series, are not however evidence of causal relationship between younger and older workers' employment. We then use an index summarizing the intensity of policies aiming at removing older workers from the labor market, based on Social Security wealth. The effect of the wealth index on youth labor market outcomes is always significant, whatever the set of the control variables we use and with a similar size and the same sign. The coefficient is negative for both the unemployment and employment of youth, with or without controlling for school attendance. In France policies aiming at removing older workers from the labor market have been prompted by increase in unemployment. Granger causality tests between youth unemployment and the Wealth index show therefore a significant link in both directions, whereas nothing is significant between youth emplo
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Suggested Citation

  • Melika Ben Salem & Didier Blanchet & Antoine Bozio & Muriel Roger, 2010. "Labor Force Participation by the Elderly and Employment of the Young: The Case of France," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 119-146, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8254
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    References listed on IDEAS

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    1. Antoine d'Autume & Jean-Paul Betbèze & Jean-Olivier Hairault, 2006. "Les seniors et l'emploi en France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00202023, HAL.
    2. Diamond, Peter A., 2002. "Social Security Reform," OUP Catalogue, Oxford University Press, number 9780199247899.
    3. Antoine Bommier & Thierry Magnac & Muriel Roger, 2003. "Le marché du travail à l'approche de la retraite entre 1982 et 1999, évolutions et évaluations," Revue Française d'Économie, Programme National Persée, vol. 18(1), pages 23-82.
    4. Ronan Mahieu & Didier Blanchet, 2004. "Estimating Models of Retirement Behavior on French Data," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 235-284, National Bureau of Economic Research, Inc.
    5. Didier Blanchet & Florence Legros, 2002. "France: The Difficult Path to Consensual Reforms," NBER Chapters, in: Social Security Pension Reform in Europe, pages 109-136, National Bureau of Economic Research, Inc.
    6. Didier Blanchet & Louis-Paul Pele, 1999. "Social Security and Retirement in France," NBER Chapters, in: Social Security and Retirement around the World, pages 101-133, National Bureau of Economic Research, Inc.
    7. Didier Blanchet & Thierry Debrand, 2008. "The sooner, the better? Analyzing preferences for early retirement in European countries," Working Papers DT13, IRDES institut for research and information in health economics, revised Jul 2008.
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    Cited by:

    1. Luc Behaghel & Didier Blanchet & Thierry Debrand & Muriel Roger, 2012. "Disability and Social Security Reforms: The French Case," NBER Chapters, in: Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participatio, pages 301-326, National Bureau of Economic Research, Inc.
    2. Arrondel, L. & Debbich, M. & Savignac, F., 2013. "Financial Literacy and Financial Planning in France," Working papers 465, Banque de France.
    3. Martha Alicia Yánez Contreras & Cristian David Maldonado Pedroza & Katherin Paola Del Risco Serje, 2016. "Participación laboral de la población de 60 años de edad o más en Colombia," Revista de Economía del Caribe 014790, Universidad del Norte.
    4. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
    5. Werner Eichhorst & Tito Boeri & An De Coen & Vincenzo Galasso & Michael Kendzia & Nadia Steiber, 2014. "How to combine the entry of young people in the labour market with the retention of older workers?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    6. Michela Bia & Pierre-Jean Messe & Roberto Leombruni, 2010. "Young-in Old-out: a new evaluation," TEPP Working Paper 2010-14, TEPP.
    7. Simon Rabaté & Julie Rochut, 2017. "Employment and Substitution Effects of Raising the Statutory Eligibility Age in France," Working Papers halshs-01622346, HAL.
    8. Etienne Lalé, 2018. "Turbulence and the employment experience of older workers," Quantitative Economics, Econometric Society, vol. 9(2), pages 735-784, July.
    9. Hélène Blake & Clémentine Garrouste, 2017. "Collateral effects of a pension reform in France," Working Papers hal-01500683, HAL.

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