As the Workforce Ages: Costs, Benefits and Policy Challenges.

• Author: Dunson, Bruce H.

The papers in this volume provide a broad, well rounded treatment of topics associated with the aging process. It consists of eleven essays from a conference at Cornell University's School of Industrial and Labor Relations. These papers focus on three different aspects of an aging workforce.

Section one focuses on aging workers around the world. In the first paper, "Demographic Change and the Destiny of the Working-Age Population," Martha Farnsworth Riche examines the size and magnitude of the change to an older working age population. Riche shows that changing assumptions about only three variables, births, deaths, and net migration, can cause major differences in population projections.

Riche next lays the framework for examining demographic changes that are currently in progress: The population will increase, and it will age. Moreover, consistent with a greying population is a greying workforce. A greying workforce, however, may or may not be a cause for alarm. Based upon other changes in the population Riche suggests the need to closely watch the developments, such as the growth in the age gap between major race and ethnic groups. For example, in 2010, the average non-Hispanic white will be 41.4 years, the average black will be 31.4 years and the average Hispanic 29.3 years. Furthermore, although 71 percent of Americans will be white in 2000, fewer than two in three children will be white. Riche notes that these projections call for an assessment of the potential for a new decrease in labor productivity.

Next, Phillip B. Levine, "Examining Labor Force Projections for the Twenty-First Century," argues that the existing methodology for projecting the labor force is flawed, because the standard technique is to extrapolate past trends in labor force behavior into the future. He suggests the development of an economic model of labor force behavior to project changes in the labor force.

Levine examines the hypothesis that social security and pension benefits are related to changes in labor force participation rates, abstracting from changes in wealth. He assumes that workers similar in age should have the same amount of wealth. He shows that the difference between the Labor Force Participation Rates (LFPRs) of workers age 60 to 61 and 62 to 64 changes as the social security average primary insurance amount (PIA) changes. Since the younger group is not eligible for social security retirement benefits, an increase in benefits should increase...