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Releasing jobs for the young? Early retirement and youth unemployment in the United Kingdom

  • James Banks


    (Institute for Fiscal Studies and University of Manchester)

  • Richard Blundell


    (Institute for Fiscal Studies and IFS and UCL)

  • Antoine Bozio


    (Institute for Fiscal Studies and Institut des Politiques Publiques, Paris School of Economics)

  • Carl Emmerson


    (Institute for Fiscal Studies and Institute for Fiscal Studies)

This paper tries to assess whether or not we have any empirical evidence of links between early retirement and youth unemployment. Most economists would today dismiss the idea immediately as another version of the na�ve 'lump-of-labor fallacy'. In its most basic form, this proposition holds that there is a fixed supply of jobs and that any reduction in labor supply will reduce unemployment by offering jobs to those who are looking for ones. Taken to the extreme, this view would support that the idea that a high level of employment of one group of individuals can only be at the expense of another group: if for instance were the population of a country to increase, younger individuals would be unemployed as older individuals would not 'release' enough jobs for the new entrants. The absurdity of this view in the long term is simply seen by considering the fact that the size of a country does not bear any relation to the share of population unemployed.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W10/02.

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Date of creation: Mar 2010
Date of revision:
Handle: RePEc:ifs:ifsewp:10/02
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  1. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1, December.
  2. Jonathan Gruber & David A. Wise, 2007. "Introduction to "Social Security Programs and Retirement around the World: Fiscal Implications of Reform"," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 1-42 National Bureau of Economic Research, Inc.
  3. Jonathan Gruber & David A. Wise, 2007. "Social Security Programs and Retirement around the World: Fiscal Implications of Reform," NBER Books, National Bureau of Economic Research, Inc, number grub07-1, December.
  4. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Gerontocracy, retirement, and social security," Economics Working Papers 383, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Tom Walker, 2007. "Why economists dislike a lump of labor," Review of Social Economy, Taylor & Francis Journals, vol. 65(3), pages 279-291.
  6. Michael Anyadike-Danes & Duncan McVicar, 2008. "Has the Boom in Incapacity Benefit Claimant Numbers Passed Its Peak?," Fiscal Studies, Institute for Fiscal Studies, vol. 29(4), pages 415-434, December.
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