The Effects Of Postponing Retirement On Labor Market

Postponing retirement is concerned base on three backgrounds. The first one is aging. Following the declining fertility rate and extended life expectancy, both the individual and the society have heavier pension pressure, which is asking for delaying retirement. Second, the amount of working-age population decreases for the first time in a long period. This means that our demographic bonus is fading away. Postponing retirement will slow down it by improving the efficiency of human capital. Third, it’s necessary to research whether delaying retirement will increase employment pressure as China is still a populous nation.The paper wants to study the effect of postponing retirement on labor market. At first, it’s looking for the theoretical basis for delaying retirement. Then, it’s analyzing on the necessity and effect of delaying retirement through researching aging and employment situation. After that, it’s a empirical study about the impact of delaying retirement on labor market. At last, it’s concluded with policy proposal on postponing retirement.The paper studies the effect of postponing retirement on labor market through the method of combining theory and econometric model. Specific contents are as follows. First chapter is for literature review with summary both at home and abroad for delaying retirement of different methods and conclusions, mainly related to postponing retirement and employment. Chapter two is theoretical analysis. Based on life-cycle hypothesis, aging requires extending work time as well as high retirement age. Analysis based on DMP model created by Diamond, Mortensen and Pissarides suggests that early retirement cannot supply more work vacancy for young people. Chapter three analyzes the current situation. The quick and high aging with the significant individual life-cycle change requires delaying retirement. Total current employment pressure cannot be ignored, but in the long run, population aging will reduce labor supply, which reduces the demographic dividend to burden. Postponing retirement can delay that. And employment problem arises mainly from the structural contradictions rather than increasing working-age population caused by delaying retirement. Chapter four is the empirical analysis. The empirical analysis calculates the influencing parameter of different variables. The simulation concludes that postponing retirement step by step has no adverse effect on the employment and different beginning time has different impacts. Chapter five presents policy proposals. It contains the principles, action path and related reforms. At last, it concludes the whole article.Innovation of the paper is indicated on two aspects as follows:(1) Using formula based on job-searching theory to analyze the impact of delaying retirement on employment, with the conclusion that early retirement go against with employment of the young.(2) Using estimated real unemployment rates to do an empirical analysis to find the effects of demographic factor on unemployment rate and using simulation to predict the trend of unemployment rate. Data needs to be more precise, especially the real unemployment rate.