Tuesday, April 22, 2014

"One of the Oldest Mistakes in Economics"

Allister Heath:
One secular shift that has made the plight of the young stand out even more is that our oldest workers have done remarkably well. There has been a boom in folk of pensionable age remaining or rejoining the workforce... Far more jobs have been created for pensioners during that time than have been filled by young people. 
This doesn't mean that older people have "stolen" the jobs of the young; the lump of labour fallacy is one of the oldest mistakes in economics. There is no set number of jobs, to be divvied up between young and old; all should theoretically be able to find work and in many cases an increase in the supply of labour also increases its demand. But the numbers are another reminder of how badly young people have fared.
Shorter Allister Heath: It happened but theoretically it isn't supposed to happen and in many cases it doesn't happen therefore it didn't happen.

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