With workers in many advanced and emerging market economies aging faster than they are being born, leaders in these countries will need to find creative ways to cope with the challenges of shrinking labor forces, fiscally unsustainable pension systems and unemployment.
Carol Graham, a senior fellow at the Brookings Institution and professor of public policy at the University of Maryland, proposes flexible work times and retirement schemes as part of a possible solution to these challenges. In her paper, "Late-Life Work and Well-Being," Graham maintains that flexible retirement can potentially enhance well-being, which is linked to better health and higher productivity, and reduced unemployment and pension burdens.
Using Gallup World Poll data on well-being, income, health, employment and other variables in more than 160 countries, Graham explored the effects of late-life work across several dimensions of well-being and in different countries and regions. Graham investigated the relationship between employment status, work arrangements and subjective well-being (including job satisfaction).
In her paper, Graham identifies several benefits of flexible work arrangements:
- "Voluntary part-time workers have more life satisfaction and less stress and are more satisfied with their jobs than full-time workers.
- Flexible approaches to retirement and to part-time work are linked to higher levels of well-being, at least in labor markets where flexible work is a choice.
- Workers who remain in the labor force after retirement age are more satisfied with their health and are happier than their retired counterparts."
But she also finds some potential drawbacks:
- "Changing employment and retirement schemes will have administrative, bargaining, and implementation costs for employers and employees.
- Employers may incur short-term costs from shifting to shared and part-time work.
- [Flexible work arrangements] are likely to be less feasible in countries with large informal sectors, where reducing precarious employment remains a priority.
- Different cultural norms and labor market practices will affect the feasibility of such arrangements and will mediate their effects on well-being."
However, Graham notes, "policies that support more flexible labor market arrangements, including incentives for job-sharing and remaining in the labor force after retirement age, can help overcome these problems."
Graham finds that it may be too early to recommend general labor market policies based solely off these findings. She writes, "Given the very clear gains in well-being and the links between well-being and health and labor market performance, among other benefits, exploring ways to increase flexibility and introduce more choice in work arrangements and retirement decisions would be prudent."