Post-recession it is common to hear concerns that youth, facing high unemployment rates, are unable to find good job opportunities. Historically, youth have experienced higher unemployment rates than older workers. In the context of an aging workforce dominated by the baby boom generation and delayed retirement, there appears a general concern that older workers are filling jobs that would otherwise be held by youth. In response, policy makers may contemplate policies designed to alleviate the concerns of youth in an aging workforce. Examples of such policies exist in other countries: for example the U.K. had run the Job Release Scheme (JRS) for over a decade, providing incentives for older workers to retire early. Such arguments also appear to drive retirement policy in China.
Can we expect such policies to improve job opportunities for youth?
Sundip Dhanjal and Tammy Schirle investigate whether an aging workforce affects the job opportunities of youth in Workforce Aging and the Labour Market Opportunities of Youth: Evidence from Canada.
Provincial data from the 1976-2013 Labour Force Surveys and a fixed-effects model is used to estimate the effect of the share of the adult male labour force that is aged 55 to 69 on the employment and unemployment rates of men aged 25 to 29.
They estimate effects on other labour market outcomes including wages and school enrolment, and other samples of younger men and women.
There is no evidence to suggest that a growing share of older workers negatively affects the decisions or outcomes of youth in the labour market. To the contrary, there is weak evidence to suggest an aging population has a positive effect on the labour market outcomes of youth.
The estimates in this study contribute to the body of international evidence suggesting population aging has not had a negative effect on the labour market outcomes of young people they conclude.
Consistent with other studies, there appears to be some evidence of a positive effect. This could reflect complementarities in the skills brought to the labour market by older and younger workers. It may also reflect a growth in aggregate demand that could occur as a larger portion of individuals reach a peak in their age-earnings profiles.
The evidence does not suggest that policy makers should not concern themselves with the functioning of youth labour markets. Although less dire than the situation in the United States, the most recent recession may have long-term negative effects on youth.
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