differences in the labor market characteristics between older and younger workers will likely influence the relationship between the employment of older persons and the labor market outcomes of younger persons, which will be analyzed further in the upcoming sections.

# **3 Literature review**

**At the macroeconomic level, research in a number of high-income countries has found no adverse relationship – and even a positive relationship – between the employment of older persons and the labor market outcomes of younger persons.** A study of 12 OECD countries<sup>7</sup> between 1960 to 2006 finds that an increase in the employment of older persons is estimated to decrease the unemployment rate of younger persons (Gruber et al. 2010). These findings hold both for analyses conducted within and between countries, as well as for causal analyses using natural experiments (Gruber et al. 2010). Focusing on the United States in the years 1977 to 2011, Munnell and Wu (2013) find no evidence that greater employment among older persons decreases either the job opportunities or wage rates of younger persons. This finding is consistent across genders and for groups with different levels of education. Munnell and Wu (2013) also conduct causal analysis using older male mortality rates as an instrumental variable, and do not find any consistent evidence that the employment of older persons adversely affects the labor market outcomes of younger persons. In Japan, using a firm-level survey, Kondo (2016) finds that increased elderly employment is not associated with a decline in the hiring of young full-time workers. They did, however, find that hiring elderly workers may lead to a decline in the hiring of female part-time workers (Kondo 2016). This is consistent with findings from the United States that suggests that age-friendly jobs (i.e. jobs that are more conducive for older workers) are also more desirable among women, who may prefer flexibility (Acemoglu et al. 2022). That aside, these findings generally suggest that in high-income countries, older and younger workers are not substitutes; instead, they are more likely to be complements (Kalwij, Kapteyn and De Vos 2010). For example, older workers may have job-specific knowledge resulting for their experience, while younger workers are yet to accumulate such experience but may be more technologically adept.

**Similarly, there is virtually no evidence of an adverse relationship between elderly employment and the labor market outcomes of younger persons in developing countries at the macroeconomic level.** In a sample of eleven Latin American countries (eight of which are developing countries),<sup>8</sup> Apella (2024) finds significant positive relationships between the employment of older persons and the labor market outcomes in terms of employment and wages of youth across genders. This analysis was conducted using a panel dataset that was built using household surveys from each of the countries. In their analysis of China, Zhang (2012) finds significant positive relationships between the employment rate of older persons and younger persons across genders. They also find some evidence of significant positive relationships between the employment rate of older persons and the income earned by younger men and women. This is consistent with Munnell and Wu (2013), who do not find any evidence that the employment of older

> 7 The 12 OECD countries are Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the United Kingdom, and the United States.

> 8 The 11 countries are Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador, Mexico, Panama, Paraguay, Peru, and Uruguay.  Out of these, Chile, Panama, and Uruguay are categorized as high-income countries by the World Bank in 2023.

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