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

Author

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  • 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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3456
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    References listed on IDEAS

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    Cited by:

    1. Almeida, Rita & Carneiro, Pedro, 2009. "The return to firm investments in human capital," Labour Economics, Elsevier, vol. 16(1), pages 97-106, January.
    2. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    3. Forteza, Alvaro, 2008. "The portability of pension rights : general principals and the Caribbean case," Social Protection Discussion Papers and Notes 46188, The World Bank.
    4. Kuddo, Arvo, 2009. "Structural educational reform : evidence from a teacher's displacement program in Armenia," Social Protection Discussion Papers and Notes 47164, The World Bank.
    5. Milan Vodopivec & Lilijana Madjar & Primoz Dolenc, 2009. "Non-performance of the Severance Pay Program in Slovenia," Financial Theory and Practice, Institute of Public Finance, vol. 33(1), pages 89-102.
    6. Woolford, Geoff, 2009. "Social protection for migrants from the Pacific Islands in Australia and New Zealand," Social Protection Discussion Papers and Notes 49174, The World Bank.
    7. Chae, ChangKyun & Chung, Jaeho, 2009. "Pre-employment vocational education and training in Korea," Social Protection Discussion Papers and Notes 52186, The World Bank.
    8. Ajantha, Sisira Kumara & Tharaka, Sameera Senanayaka, 2012. "The Employment Status of the Elderly in Sri Lanka: Patterns and Determinants," MPRA Paper 42977, University Library of Munich, Germany, revised 30 Nov 2012.
    9. Makhema, Mpho, 2009. "Social protection for refugees and asylum seekers in the Southern Africa Development Community (SADC)," Social Protection Discussion Papers and Notes 49168, The World Bank.
    10. Avato, Johanna & Koettl, Johannes & Sabates-Wheeler, Rachel, 2009. "Definitions, good practices, and global estimates on the status of social protection for international migrants," Social Protection Discussion Papers and Notes 49172, The World Bank.
    11. Holzmann, Robert, 2010. "Bringing financial literacy and education to low and middle income countries : the need to review, adjust, and extend current wisdom," Social Protection Discussion Papers and Notes 56501, The World Bank.
    12. Ali Saleh Alarussi & Eng Zhi Yen, 2023. "The Impact of Population Aging on Economic Growthin Asian Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 33-53.
    13. Piggott, John & Sane, Renuka, 2009. "Indexing pensions," Social Protection Discussion Papers and Notes 52445, The World Bank.
    14. Vodopivec, Milan & Arunatilake, Nisha, 2008. "Population aging and the labor market : the case of Sri Lanka," Social Protection Discussion Papers and Notes 44927, The World Bank.
    15. Ferrer, Ana M. & Riddell, W. Craig, 2009. "Unemployment insurance savings accounts in Latin America : overview and assessment," Social Protection Discussion Papers and Notes 49173, The World Bank.
    16. James, Estelle, 2009. "Rethinking survivor benefits," Social Protection Discussion Papers and Notes 52919, The World Bank.
    17. Rofman, Rafael & Fajnzylber, Eduardo & Herrera, German, 2008. "Reforming the pension reforms : the recent initiatives and actions on pensions in Argentina and Chile," Social Protection Discussion Papers and Notes 90346, The World Bank.
    18. Athula Ranasinghe & Sunimalee Madurawala & Jen Je Su & Thushara Senadeera, 2016. "An empirical investigation of labor shortage in the manufacturing sector in Sri Lanka," Discussion Papers in Economics economics:201605, Griffith University, Department of Accounting, Finance and Economics.
    19. Koettl, Johannes, 2009. "Human trafficking, modern day slavery, and economic exploitation," Social Protection Discussion Papers and Notes 49802, The World Bank.
    20. Woo, Kye Lee, 2009. "Productivity increases in SMEs : with special emphasis on in-service training of workers in Korea," Social Protection Discussion Papers and Notes 51251, The World Bank.
    21. Murrugarra, Edmundo, 2011. "Employability and productivity among older workers : apolicy framework and evidence from Latin America," Social Protection Discussion Papers and Notes 63230, The World Bank.
    22. Preeti Dhillon & Laishram Ladusingh, 2013. "Working life gain from gain in old age life expectancy in India," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 28(26), pages 733-762.
    23. Lord, Janet & Posarac, Aleksandra & Nicoli, Marco & Peffley, Karen & Mcclain-Nhlapo, Charlotte & Keogh, Mary, 2010. "Disability and international cooperation and development : a review of policies and practices," Social Protection Discussion Papers and Notes 56092, The World Bank.
    24. Valdés-Prieto, Salvador, 2008. "A theory of contribution density and implications for pension design," Social Protection Discussion Papers and Notes 90344, The World Bank.
    25. Ra, Young-Sun & Shim, Kyung Woo, 2009. "The Korean case study : past experience and new trends in training policies," Social Protection Discussion Papers and Notes 53696, The World Bank.

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    More about this item

    Keywords

    labor demand for old workers; labor supply of old workers; population aging;
    All these keywords.

    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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