Will Delayed Retirement by the Baby Boomers Lead to Higher Unemployment among Younger Workers?

Yanyuan Wu, Boston College
Alicia Munnell, Boston College

Using 1977-2011 data from the Current Population Survey, this paper investigates the oft-repeated claim that delayed retirement by the baby boomers will result in higher unemployment among the young. It explores both time-series and cross-state variation, and use instrumental-variable models to determine the extent to which such “crowding out” exists in the United States. The estimates show no evidence that increasing the employment of older persons reduces the job opportunities or wage rates of younger persons. Estimates using elderly male mortality rates as instrumental variables also produce no consistent evidence that changes in employment rates of older workers adversely affect their younger counterparts. Finally, despite the fact that the labor market downturn that accompanied the Great Recession was the most severe experienced in the postwar era, the effects of elderly employment on other segments of the labor market do not differ from those during typical business cycles.