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Are There Jobs for Everyone ? An Analysis of the Relationship between the Employment of Older and Younger Persons in Indonesia

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  • Amanina Binti Abdur Rahman

Abstract

Against the backdrop of aging, Indonesia has started to address important policy challenges, including by gradually raising the retirement age. However, the increase in the retirement age and the prospect of longer employment of older persons raises concerns about its potential impact on the employment of younger persons. This paper is the first to analyze the relationship between the employment rate of older persons and the labor market outcomes of younger persons in Indonesia. Using data from the Indonesia Labour Force Survey (Sakernas) for 2016 to 2023, the analysis explores the relationship between the labor market outcomes – that is, the employment rates, unemployment rates, hours worked, and income – of younger persons and older persons. The findings show that overall, an increase in the employment rate of older persons is significantly associated with an increase in the employment rate of youth and prime-aged persons. The positive relationship is robust and is found across most of the specifications tested, that is, across genders, education levels, sectors, and within the formal sector. Encouragingly, there is no evidence of a significant negative relationship between the employment of older persons and younger persons. When there is a significant negative relationship between the employment of older persons and other employment outcomes of younger persons, the magnitude is small. These findings support the notion that raising the retirement age can address some of the challenges faced by an aging society. Finally, lifelong learning, upskilling, and reskilling are important to facilitate longer working lives by ensuring that older workers remain employable in a changing economy.

Suggested Citation

  • Amanina Binti Abdur Rahman, 2024. "Are There Jobs for Everyone ? An Analysis of the Relationship between the Employment of Older and Younger Persons in Indonesia," Policy Research Working Paper Series 10972, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10972
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    References listed on IDEAS

    as
    1. Acemoglu, Daron & Mühlbach, Nicolaj Søndergaard & Scott, Andrew J., 2022. "The rise of age-friendly jobs," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    2. Zhang, Chuanchuan, 2012. "The relationship between elderly employment and youth employment: evidence from China," MPRA Paper 37221, University Library of Munich, Germany.
    3. Ayako Kondo, 2016. "Effects of increased elderly employment on other workers’ employment and elderly’s earnings in Japan," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-23, December.
    4. Alicia Munnell & April Wu, 2013. "Do Older Workers Squeeze Out Younger Workers?," Discussion Papers 13-011, Stanford Institute for Economic Policy Research.
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