Title: Demographic and economic considerations for future retirement policy.
Abstract: At this time in the US there is growing sentiment to abolish mandatory retirement particularly in the federal government. The arguments presented in this discussion point to the need for taking this step in order to meet future labor market needs. Recent amendments to the Age Discrimination in Employment Act of 1978 have changed the complexion of institutionalized mandatory retirement. Anticipated changes in the demographic characteristics of the country and the economic implications of these changes may be expected to have further important implications for future retirement policy. The intention in this discussion is to illustrate the nature of these changes as they will influence retirement policy. The changes considered in this context include the relative size and rate of increase in the labor force rates of inflation and problems of social security and pension financing. The fact that the potential labor force will be a larger share of the countrys population does not imply that labor will be in abundance. It is argued that the opposite will be the case. Increases in the level of per capita consumption and income suggest increases in the demand for labor to produce goods and services. A great deal of the increased demand for labor can be realized through substitution of capital for labor but an additional and growing need for labor will remain. Projections of total income and labor force made by Ronald Ridker suggest that over the coming half century the expansion of demand relative to labor will be appreciably greater than has been true thus far in the 20th century. The extent to which this rapid increase in demand will induce a labor shortage will depend upon changes in productivity changes in the level of capital formation or possible changes in immigration laws. Those in the labor force would appear to be better off under conditions of relatively high and sustained inflation than individuals who depend upon assets and transfers for the bulk of their income. Labor force participation should be encouraged for as long as the individual is willing and able to work and such a policy would also ease the anticipated burden on social security and other similarly funded retirement plans. It would seem that the pressures on pension financing could be greatly alleviated by allowing more upward flexibility in the choice of retirement age.
Publication Year: 1981
Publication Date: 1981-01-01
Language: en
Type: article
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Cited By Count: 1
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