Working Paper: CEPR ID: DP693
Authors: Christoph Schmidt
Abstract: While ageing is accepted as a major problem for most industrialized societies, its labour market consequences are not yet fully understood. This paper analyses the effects of changes in the age composition of the Federal Republic of Germany on the incidence of unemployment in different sex-age groups. The German population has aged substantially in recent decades because of declining fertility and a halt in guestworker recruitment. The German wage-setting process appears to be characterized by the presence of a strong union movement that hampers flexible wage adjustments. Thus, age structure variations can be expected to lead to fluctuations in age-specific unemployment rates. In general, this intuition is confirmed by the estimations presented here. A strong positive relationship between the size of a cohort and its relative unemployment experience can only be established formally for a few sex-age groups, however.
Keywords: ageing; cohort size; unions; unemployment; migration; cointegration
JEL Codes: J14; J51; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| variations in age structure (J11) | relative unemployment experience (J64) |
| cohort size (C92) | relative unemployment experience (younger cohorts) (J69) |
| aggregate unemployment rate (J64) | age-specific unemployment rates (J69) |
| age structure variations (J11) | long-term unemployment effects (J65) |
| age-specific unemployment rates (J69) | cohort sizes (C92) |
| aggregate unemployment rate (J64) | unemployment rate of younger workers (ages 15-24) (J64) |
| aggregate unemployment rate (J64) | unemployment rate of older workers (ages 55-64) (J14) |