Youth Unemployment and Retirement of the Elderly: the Case of Italy

Agar Brugiavini and Franco Peracchi

No 2008_45, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: This paper shows that the �lump of labor� assumption fails in Italy. The direct relationship between the unemployment rate of the young and the labor force participation of the old is pro-cyclical, i.e. a higher labor force participation of the old is related to a lower unemployment rate of the young. Hence both vary with the business cycle. In order to overcome endogeneity problems in explaining unemployment of the young, we resort to a simulated variable: �the inducement to retire�, which is constructed by simulating the social security benefits. We related the unemployment rate of the young to this incentive measure and find that a higher inducement to retire is associated to a higher unemployment rate � quite the opposite of the �young-in-old-out� story.

Keywords: lump of labour; youth unemployment; early retirement (search for similar items in EconPapers)
JEL-codes: H3 J2 J6 (search for similar items in EconPapers)
Pages: 54
Date: 2008
New Economics Papers: this item is included in nep-age, nep-eec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Chapter: Youth Unemployment and Retirement of the Elderly: The Case of Italy (2010)
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