Firm and Worker Dynamics in an Aging Labor Market

Niklas Engbom

No 756, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: I develop an idea flows theory of firm and worker dynamics in order to assess the consequences of population aging. Older people are less likely to attempt entrepreneurship and switch employers because they have found better jobs. Consequently, aging reduces entry and worker mobility through a composition effect. In equilibrium, the lower entry rate implies fewer new, better job opportunities for workers, while the better matched labor market dissuades job creation and entry. Aging accounts for a large share of substantial declines in firm and worker dynamics since the 1980s, primarily due to equilibrium forces. Cross-state evidence supports these predictions.

Keywords: Demographics; Employment; Economic growth; Labor turnover; Entrepreneurial choice (search for similar items in EconPapers)
JEL-codes: E24 J11 O40 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2019-04-10
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-ent, nep-lab and nep-mac
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:756

DOI: 10.21034/wp.756

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