Are There Jobs for Everyone? An Analysis of the Relationship between the Employment of Older and Younger Persons in Indonesia
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Washington, DC: World Bank
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Against the backdrop of aging,
Indonesia has started to address important policy
challenges, including by gradually raising the retirement
age. However, the increase in the retirement age and the
prospect of longer employment of older persons raises
concerns about its potential impact on the employment of
younger persons. This paper is the first to analyze the
relationship between the employment rate of older persons
and the labor market outcomes of younger persons in
Indonesia. Using data from the Indonesia Labour Force Survey
(Sakernas) for 2016 to 2023, the analysis explores the
relationship between the labor market outcomes – that is,
the employment rates, unemployment rates, hours worked, and
income – of younger persons and older persons. The findings
show that overall, an increase in the employment rate of
older persons is significantly associated with an increase
in the employment rate of youth and prime-aged persons. The
positive relationship is robust and is found across most of
the specifications tested, that is, across genders,
education levels, sectors, and within the formal sector.
Encouragingly, there is no evidence of a significant
negative relationship between the employment of older
persons and younger persons. When there is a significant
negative relationship between the employment of older
persons and other employment outcomes of younger persons,
the magnitude is small. These findings support the notion
that raising the retirement age can address some of the
challenges faced by an aging society. Finally, lifelong
learning, upskilling, and reskilling are important to
facilitate longer working lives by ensuring that older
workers remain employable in a changing economy.
Palabras clave
AGING, EMPLOYMENT, YOUTH EMPLOYMENT