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Will delayed retirement by Baby Boomers lead to higher unemployment among younger workers?

by on January 13, 2014

This is the question posed by researcher economists Alicia Munnell and April Yanyuan Wu based at the Center for Retirement Research at Boston College, and who wrote this paper on the subject last year. Their answer is no, that there is no evidence to support this assertion.

As reported here on the Union Bulletin website, the question is based on the ‘lump of labour’ theory which maintains that there are only a fixed number of jobs in the labour market. Although the article refers to the US where the theory is said to have ‘maintained traction’, we have seen similar arguments in the UK too.

In the paper, Munnell and Wu analyse (US) Current Population Survey data to test for changes in employment among those under 55 when those aged 55 and over worked in greater numbers. They found no evidence that younger workers were losing work and in fact found the opposite: higher employment, reduced unemployment and higher wages.

What’s also interesting is the researchers’ assessment of why the findings can be hard for people to understand. Munnel is quoted as saying: “They just could not get in their heads this dynamism that is involved. You can’t extrapolate from the experience of a single company to the economy as a whole.”

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