The Macroeconomic Effects of Older Workers’ Labor Force Participation: An Estimate for France

Hippolyte d'Albis (), Mélika Ben Salem () and Ekrame Boubtane ()
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Hippolyte d'Albis: ESSEC Business School and THEMA (UMR 8184) - ESSEC Business School - THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université
Mélika Ben Salem: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel, Université Gustave Eiffel
Ekrame Boubtane: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This article uses VAR models to evaluate the macroeconomic and fiscal impacts of changes in the labor force participation of older workers (aged 55 to 64) using quarterly data from 1980 to 2022. We find that the elasticity of GDP per capita with respect to the participation rate of older workers is 0.22, while the elasticity of the public budget balance is 0.09. Conversely, a decline in participation leads to a reduction in GDP and a deterioration of the fiscal balance, with effects larger in magnitude than those resulting from an increase. We also show that rising participation among older workers is accompanied by an increase in the participation of younger workers, suggesting complementarity across age groups. Initially, higher participation among older workers is associated with a temporary decline in productivity and a rise in unemployment; after two years, however, productivity increases and unemployment returns to its pre-shock level.

Keywords: Older workers; VAR models (search for similar items in EconPapers)
Date: 2026-06-29
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