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The Impact of Population Aging on the Labor Market: The Case of Sri Lanka

Author

Listed:
  • Vodopivec, Milan

    () (University of Primorska)

  • Arunatilake, Nisha

    () (Institute for Policy Studies of Sri Lanka)

Abstract

Sri Lanka’s population is predicted to age very fast during the next 50 years, bringing a slowdown of labor force growth and after 2030 its contraction. Based on an original, 2006 representative survey of old people in Sri Lanka conducted as a part of this study, the paper examines labor market consequences of this process, focusing on retirement pathways and the determinants of labor market withdrawal. The paper finds that a vast majority of Sri Lankan old workers are engaged in the informal sector, work long hours, and are paid less than younger workers. Moreover, as one of the first findings of its kind, the paper shows that labor market duality that characterizes most developing countries carries over to old age: (i) previous employment is the most important predictor of the retirement pathway; (ii) older workers fall into two categories: civil servants and formal private sector workers, who generally stop working before they reach 60 because they are forced to do so by mandatory retirement regulations, and casual workers and the self-employed, who are forced to work until very old age (or death) due to poverty and who stop working primarily because of poor health; and (iii) the option of part-time work is used primarily by workers who held regular jobs in their prime age employment, but not by casual workers and self-employed.

Suggested Citation

  • Vodopivec, Milan & Arunatilake, Nisha, 2008. "The Impact of Population Aging on the Labor Market: The Case of Sri Lanka," IZA Discussion Papers 3456, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3456
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    References listed on IDEAS

    as
    1. World Bank, 2007. "Sri Lanka : Strengthening Social Protection," World Bank Other Operational Studies 19638, The World Bank.
    2. F. Landis MacKellar, 2000. "The Predicament of Population Aging: A Review Essay," Population and Development Review, The Population Council, Inc., vol. 26(2), pages 365-404.
    3. Joaquim Oliveira Martins & Frédéric Gonand & Pablo Antolín & Christine de la Maisonneuve & Kwang-Yeol Yoo, 2005. "The Impact of Ageing on Demand, Factor Markets and Growth," OECD Economics Department Working Papers 420, OECD Publishing.
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    More about this item

    Keywords

    labor demand for old workers; labor supply of old workers; population aging;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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