Leadership

Early Retirement And Employment Of The Young

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Executive Summary

Policy makers have often argued that an additional benefit of facilitating early retirement is that it creates employment for the young. This may happen if older and younger workers are substitutes. Nowadays policy makers' goals are to discourage early retirement to counter the economic consequences of an aging population and, interestingly, the consequences for youth employment appear to play no role in this. This paper studies the nexus between employment of older and younger workers in more depth, if only to put any concerns for adverse effects of later retirement to rest. To empirically investigate this issue the authors estimate a dynamic model of employment of the young, prime age and old people using panel data of 22 OECD countries over the time period 1960-2004.

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