Does increasing the retirement age increase youth unemployment? Evidence from an agent-based macro model

In recent years, several OECD countries have tackled the problem of the fiscal sustainability of their pension systems by increasing the statutory retirement age, although many fear that such policies may reduce job opportunities for the young in favor of older workers. In this paper, we test such a hypothesis using an agent-based macro model suitable for the analysis of issues related to demography. Results from a number of computational experiments show that in the long run, old workers do not crowd out the young, which is consistent with the empirical evidence. Moreover, we find that increasing the retirement age does reduce job opportunities for the young in the short run, but not so much in the long run. This suggests that any pension reform increasing the retirement age should be accompanied by some protective measures for young workers.