Intervening on the Supply Side of the Labor Market

Abstract

Several policy measures that have been proposed to unclog the labor markets in advanced industrial countries, such as early retirement, extension of compulsory education, shorter working weeks, or work sharing, are ineffective. Therefore a more comprehensive approach is required to reduce the amount of time that individuals spend in the labor market during their life span. Such an approach would aim at combining or alternating periods of education, work, and retirement throughout a person's adult life. Elements of the approach are recurrent education, flexibility of labor supply in accordance with the need of the labor market, discriminatory application for the sake of income distribution, and harmonization of the social security system. The scheme could be financed by money now invested in social security schemes of all kinds as well as out of existing educational budgets.