Adjusting to an Aging Labor Force

Edward Lazear

No 2802, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Demographic changes in the labor force will imply that firms must change their labor policies in the coming decades. My estimates suggest that the labor force will get older and more female. The aging will not be as pronounced for males as for females because the trend toward early retirement among males will offset demographic changes. The size of the labor force will grow until around 2015 and then will decline. Given these changes, there are a number of issues that face employers. First, the aging workforce may mean an increase in the size of the firm's current deficit, defined as the difference between sales and labor cost. Second, under these circumstances, firms may do well to invest in assets that are highly correlated with the nominal wage bill liability. Short-term treasury bills are a good candidate, as is, paradoxically, putting pension assets back in the capital of the firm itself. This strategy can reduce the risk of bankruptcy. Third, explicit buyouts are the easiest way to reduce the size of the elderly workforce. But this will not help the individual firm's deficit problem. Fourth, declining ages of retirement among males can be reversed by changes in social security policy. A decline in real benefits and increase in the age of entitlement are likely to have the largest effects on raising the retirement age.

Date: 1988-12
Note: AG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as David A. Wise, editor. Issues in the Economics of Aging. Chicago: The University of Chicago Press, 1990, pp. 287-312.
Published as Adjusting to an Aging Labor Force , Edward P. Lazear. in Issues in the Economics of Aging , Wise. 1990

Downloads: (external link)
http://www.nber.org/papers/w2802.pdf (application/pdf)

Related works:
Chapter: Adjusting to an Aging Labor Force (1990)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:2802

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2802

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().