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Does Elderly Employment have an Impact on Youth Employment? A General Equilibrium Approach

Author

Listed:
  • Alfred Stiassny

    (Department of Economics, Vienna University of Economics and Business)

  • Christina Uhl

    (Department of Economics, Vienna University of Economics and Business)

Abstract

Does an increase of elderly employment cause a decline in youth employment? A simplified view of a demand driven economy would give a positive answer to this question. Econometric studies based on a single equation approach deliver little support for this belief. However, these studies typically suffer from identification problems to which no attention is paid in most cases. We therefore use a general equilibrium framework when trying to quantify these effects. Using yearly and quarterly Austrian labor and gdp data, we estimate two model variants by Bayesian methods: a) a standard equilibrium model where the degree of complementarity between old, young and primary labor is crucial for the sign and strength of the relevant effects and b) a simple, solely demand driven model which always leads to a crowding out of young through an increase in employment of the old. It turned out that the demand driven model is inferior in fitting the data compared to the standard model. Further, the degree of complementarity is estimated to be strong enough to lead to a small positive effect of elderly employment on youth employment.

Suggested Citation

  • Alfred Stiassny & Christina Uhl, 2014. "Does Elderly Employment have an Impact on Youth Employment? A General Equilibrium Approach," Department of Economics Working Papers wuwp178, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp178
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor market; pension reform; equilibrium models; Bayesian estimation;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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