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Expected Changes in the Workforce and Implications for Labor Markets

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  • Phillip B. Levine
  • Olivia S. Mitchell

Abstract

This paper examines the likely effects of the aging of the baby boom on labor force attachment, unemployment, and wages. Labor market trends between now and 2020 are the focus of analysis, when the majority of the baby boom generation will confront its retirement decision. We begin by reviewing past labor force trends and discussing important limitations of existing projection methods. Key elements needed to project the consequences of the demographic shock facing the labor market are identified. The task of developing a fully specified economic model to examine the effect of the aging of the baby boom on the labor market is as yet incomplete. On the basis of the best available evidence, we suggest the following conclusions can be drawn: The trend towards earlier retirement will slow and perhaps reverse in the next few decades. Unemployment should fall among older workers and the aggregate full-employment unemployment rate should also decline as the baby boom ages. The aging of the baby boom will not depress wages substantially, either for older workers or for other demographic groups.

Suggested Citation

  • Phillip B. Levine & Olivia S. Mitchell, 1991. "Expected Changes in the Workforce and Implications for Labor Markets," NBER Working Papers 3743, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3743
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    References listed on IDEAS

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    1. Alan L. Gustman & Thomas L. Steinmeier, 1984. "Partial Retirement and the Analysis of Retirement Behavior," ILR Review, Cornell University, ILR School, vol. 37(3), pages 403-415, April.
    2. repec:hoo:wpaper:e-88-34 is not listed on IDEAS
    3. Edward P. Lazear, 1990. "Adjusting to an Aging Labor Force," NBER Chapters,in: Issues in the Economics of Aging, pages 287-316 National Bureau of Economic Research, Inc.
    4. Joseph F. Quinn & Richard V. Burkhauser & Daniel A. Myers, 1990. "Passing the Torch: The Influence of Economic Incentives on Work and Retirement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number pt, November.
    5. Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 289-318.
    6. Lumsdaine, Robin L. & Stock, James H. & Wise, David A., 1990. "Efficient windows and labor force reduction," Journal of Public Economics, Elsevier, vol. 43(2), pages 131-159, November.
    7. Richard V. Burkhauser & Joseph F. Quinn, 1983. "Is Mandatory Retirement Overrated? Evidence from the 1970s," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 337-358.
    8. Levine, Phillip B & Mitchell, Olivia S, 1988. "The Baby Boom's Legacy: Relative Wages in the Twenty-First Century," American Economic Review, American Economic Association, vol. 78(2), pages 66-69, May.
    9. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 439-457, October.
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