Early Retirement and Employment of the Young

17 Pages Posted: 2 Apr 2009

See all articles by Adriaan Kalwij

Adriaan Kalwij

IZA Institute of Labor Economics

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics

Klaas de Vos

CentERdata; Tilburg University - Center for Economic Research (CentER)

Date Written: March 1, 2009

Abstract

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. Their empirical analysis does not support the hypothesis that employment of the young and old are substitutes and finds some minor complementarities. This suggests that discouraging early retirement will have no adverse effect on youth employment.

Suggested Citation

Kalwij, Adriaan S. and Kapteyn, Arie and de Vos, Klaas, Early Retirement and Employment of the Young (March 1, 2009). RAND Working Paper Series No. WR- 679, Available at SSRN: https://ssrn.com/abstract=1371889 or http://dx.doi.org/10.2139/ssrn.1371889

Adriaan S. Kalwij (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States
310-448-5383 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Klaas De Vos

CentERdata ( email )

PO Box 90153
Tilburg, NL 5000 LE
Netherlands

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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