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Title:How aging of the labor force affects equilibrium unemployment PDF Logo
Authors:Hetze, Pascal
Ochsen, Carsten
Issue Date:2005
Series/Report no.:Thünen-series of applied economic theory 57
Abstract:This paper argues that aging of the labor force affects job creation and job destruction. To analyze this, we extend a standard model of equilibrium unemployment and search in the labor market by the distinction between age specific separation risks and a productivity differential between young and elderly workers. Based on the theo- retical model, we identify four regimes of changes in the Beveridge Curve and job creation which can occur if the age structure varies. We also present an econometric model to find out which country relates to which regime. According to the estimates we can identify all four cases. For example, Spain and the US may experience positive effects on employment when the labor force grows older. In contrast to this, the unemployment rate in Germany and Japan will rise as a consequence of the increase in the share of elderly workers.
Subjects:Vacancies and Separations
Unemployment
Job Creation
Aging of the Labor Force
Demographic Change
JEL:J63
J64
J23
J21
J10
Document Type:Working Paper
Appears in Collections:Thünen Series of Applied Economic Theory, Universität Rostock

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