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Relative Wages in Aging America: The Baby Boomer Effect

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Abstract

As Baby Boomers remain in the work force, some due to inadequate retirement savings, the labor supply of older workers (ages 55 to 74 years old) could increase relative to the labor supply of prime-age and younger workers. Economic theory suggests an increase in the relative labor supply of older Americans could lower wages or slow wage growth for younger workers if older workers are used extensively as their substitutes rather than complements.The authors estimate the degree of complementarities between workers grouped by age and sex. The results imply that policies aimed to encourage older people to stay and enter the labor market, such as increasing Social Security's full retirement age or raising Medicare eligibility to age 70, may have broad labor market effects by causing wage stagnation.

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  • Teresa Ghilarducci & Michael Papadopoulos & Siavash Radpour, 2017. "Relative Wages in Aging America: The Baby Boomer Effect," SCEPA working paper series. 2017-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2017-07
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    More about this item

    Keywords

    Planning; Transaction Matrix; Post-Keynesian; Monetary;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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