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No wonder people looking for work can't find a job. People who wish they were retired still have them.

In a new paper, two economists at the Chicago Fed — Eric French and David Benson — estimate that the labor-participation rate among people 51 to 65 years old is 2.9% higher as a result of their financial losses alone. That’s about an added 1.6 million people staying in jobs or looking for work.

In most states of the world, anything that motivates more people to work would be beneficial for the economy. Older folks have valuable skills and experience, and their participation increases the nation’s potential to produce goods and services.

But at a time when the economy is already running far below its potential, the added labor supply serves to boost the unemployment rate, as more people compete for scarce jobs. Since August, the unemployment rate for people 55 and older has averaged 7.3%, the highest level since at least 1948.


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