A potential barrier to older people staying on in the workforce is the “lump-of-labour fallacy”—the belief that there is only so much work to go around. In the old days this was used by men to argue against women joining the workforce, and it is still cited by those opposed to immigration today. But it seems obvious that it is better for the economy if a 60-year-old does a productive job than if he is sitting idle, supported by the taxpayer. And the data clearly disprove the fallacy. In Europe the participation rates of those aged 20-25 and 55-59 respectively are positively correlated; in other words, if more older people are working, the chances are that younger people will be too.And you thought I was kidding?
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Thursday, April 7, 2011
And You Thought I Was Kidding?
In a special report on pensions, Hiring Grandpa, The Economist makes the pseudo case for working longer: "it boosts output and reduces the length of time for which pensions need to be paid." Actually, theses two benefits are conditional -- output of WHAT? paid by WHOM? If pensions are a form of deferred wages, then reducing the period of payment is simply a retroactive claw back of wages. In a world in which economic "output" is increasingly separated from utility, boosting output can really mean a decrease in utility (see Bartolini).
Posted by Sandwichman at 10:26 AM