No, despite the large size of the boomer cohort relative to today’s new school leaver population, the boomer retirement will in fact be gradual, not sudden, according to my estimates using age-specific employment/population ratios. All too many Japanese continue working until age 70 and beyond, and so on average firms won’t be left short-handed and need to turn to the young, or at least not quickly. There will be no Year 2013 effect [which is when the youngest boomers, the 1948 cohort, turn 65].
Details and qualifications:
- labor economics work suggests that old and young workers are not perfect substitutes, indeed they may be complements (though that’s hard to check empirically as common shocks can produce both lower old-age and lower young-age employment). this is termed the “lock box” effect.
- measures are for headcount — employed — versus hours worked. since older workers tend not to work full time, my calculations may understate the retirement effect. however, at present there are also many underemployed (and not just unemployed) youth, so by focusing headcount I overstate employment levels at the young end, too.
- the data! — I basically need to recheck my spreadsheet from beginning to end as I made many changes as I went along. my calculations may simply be wrong! so graphs to follow…
Government policy is to encourage firms to keep older Japanese working, by making the retirement age older (target age 65 instead of the current mode of age 60), by re-employing retirees (under fixed-term contracts, eg to age 65), and by placing them with other firms. The young get no extra help. Cynically, policymakers are near retirement age and so are more sensitive to the older worker issue than to the younger worker one (high-status individuals are more likely to have children who made it into high-status universities and have jobs). plus there are more votes, there are more old than young and (as in the US) older invididuals are more likely to vote and (Japan-specific) to be tied to grass-roots electoral machines.
- graphs need to be added!!