“Business students’ perceptions of an aging workforce, higher retirement age and youth unemployment”

The relationship between an aging workforce, higher retirement age, and youth unemployment has already been established in the available literature. However, empirical research on the impact of an aging workforce, and higher retirement age on youth un-employment is limited, has conflicting results, has occurred mostly overseas, and has not considered the perceptions of young people who are about to enter the workforce. Hence, this paper aims to investigate the perceptions of the youth on the relationship between the aging workforce, higher retirement age, immigration policies, and youth unemployment. Structural equation modelling was used to analyze the responses of 183 business students. The findings establish that five relationships were supported out of seven hypothesized relationships. The key research finding reveal that immigration policies and higher retirement age are significantly related to youth unemployment. Lastly, the theoretical and managerial implications of the study were discussed, along with the limitations and recommendations for future research.


INTRODUCTION
Population aging is a global issue.Although every country faces the phenomenon, the process is occurring at different speeds in different parts of the world.It is good news that healthier ways of living and advances made by medical science have led people to live longer than ever before.The trend of people living longer is expected to continue for several decades (Chybalski & Marcinkiewicz, 2014).However, this trend of living longer has led to an increase in the number of aging population.A United Nations (2017) report revealed that the number of people aged 60 years and over was 205 million in 1950, this further increased to around 606 million in 2000 and is projected to increase to 1.2 billion and 2 billion in 2025 and 2050, respectively.Worldwide, one in eight people were aged 60 or over in 2017, while by 2050, one in five people will be aged 60 or over.However, the increase in lifespan has led to a large increase in the number of years an individual may spend in retirement (Sundali, Westerman, & Stedham, 2008).Owing to this, people can obtain more pension funds from their government without working longer or paying more tax.This remarkable change in population age structure can negatively influence the performance of economies, as well as the sustainability of government entitlement programs.Accordingly, various measures have been taken by governments to tackle the issue such as increase in retirement age.However, the proposal to increase the retirement age is subject to disapproval and opposition (Bertoni & Brunello, 2017).Previous studies investi-gated the impact of an aging workforce on job opportunities among the youth and revealed that increased professional activity of older workers in the workforce limits youth labor force participation (Boeri, Garibaldi, & Moen, 2016;Munnell & Wu, 2013).Other studies analyzed the effect of raising the retirement age on youth employment and have shown that higher retirement age negatively affects youth employment (Boeri, Garibaldi, & Moen, 2017).Therefore, these studies have concluded that an increase in the number of older workers in the labor market and older retirement age, contribute to the pressing issue of youth unemployment.On the other hand, Kreiger (2014) suggested that government immigration policies can also help to deal with the consequences of aging populations.Thomson (2017) stated that immigrants and young working-age people gain employment where workers are required.Hence, immigrants fill jobs where workers are needed.Additionally, immigrants pay taxes by working and, hence, contribute to public finances.Therefore, it can be concluded that immigrants play a dual role in destination countries.Firstly, immigrants help meet labor shortages and, secondly, immigrants contribute to public finance.However, immigrants can also hinder the entry of young graduates into the labor market, contributing to youth unemployment.Also, immigration policies introduced by various governments allow migrants to enter destination countries and, hence, generate new migrant labor.This new migrant labor may exclude native workers from jobs (Sechele, 2015).Consequently, immigration policies can also contribute to youth unemployment.
Ghafar (2016) pointed out the challenges of unemployment, specifically, faced by university graduates.Similarly, Hanna (2014) revealed that globally, the chances of young people being unemployed are around three times higher than for their parents.In the United States of America, Edwards and Hertel-Fernandez (2010) noted that young workers are twice as likely as older workers to be unemployed.In Australia, the rates of youth unemployment tend to be higher with larger swings, compared to the unemployment rates of adults (Carvalho, 2015).In New Zealand, a similar trend has been observed.Unemployment rates increased around 10% among young people aged from 15 to 19 between 2007 and 2009, while for the overall population, rates increased by 3% maximum (Johnson, 2016).This increase in unemployment rates for young people has motivated the researchers to investigate the determinants of youth unemployment.Therefore, this paper has formulated a conceptual framework of four variables (Figure 1).The research objective was to test the conceptual model for these four variables (aging workforce, immigration policies, higher retirement age, and youth unemployment).This study captured the research gap as the empirical research on the impact of aging workforce, higher retirement age on youth unemployment is limited (Bertoni &Brunello, 2017), has contrasting results, and has not considered the perceptions of young people about to enter the workforce.As a result, the current study contributes to literature by studying the student perceptions on a more holistic understanding of the links between higher retirement age, aging workforce, immigration policies and youth unemployment.To achieve this, the study combines the output of previous study and conclusive results from a survey of business students in New Zealand.The remainder of the paper is structured as follows: the literature review on four conceptualized variables is presented along with the research hypotheses.Next, under the methodology, analysis and findings are presented.The paper concludes by discussing the research implications, limitations, and future research directions.

Aging workforce
The aging workforce includes people who are 55 years of age or over and are still in employment or are keen to keep working for longer (Statistics New Zealand, 2013).With an aging population, an aging workforce would also be imminent, as people live longer and healthier lives, their ability and willingness to stay in the workforce will necessar-ily increase.Johnson (2016) described how older people in New Zealand benefited most from jobs created in the economy since 2010.Fewer than 90,000 older people were in employment in 2010, but this number had increased to 153,000 by mid-2016.Around a quarter of jobs created between 2010 and 2016 went to older people, while people aged from 15 to 19 took up fewer than 2 percent of newly created jobs.Johnson's (2016) findings are consistent with a study by Chmelova (2013), which analyzed whether higher labor force participation by older people worsened the employment situation of youth.The study confirmed that 10 percent increase in the professional activity of older workers related to a decrease in youth employment of 1 percentage point and 2 percent increase in the inactivity rate of young people.Therefore, it can be concluded that an increase in the employment rates of older people contributes to an increase in youth unemployment rates.However, existing literature reports that there are very few studies of the impact of changes in labor force participation of the older on the jobs available for youth (Queiroz, 2016).In light of the above, this study hypothesized that: H1: There is positive relationship between aging workforce and youth unemployment.2017).Although past research seems to focus on the impact of higher retirement age on youth unemployment, however, there is limited attention given to the pivotal role of higher retirement age on youth unemployment.Hence, research shows that this issue has not received much needed attention (Foster, 2012).Therefore, this research hypothesized that: H2: There is a positive relationship between aging workforce and higher retirement age.
H3: There is a positive relationship between higher retirement age and youth unemployment.

Immigration policies
Research highlights that the higher retirement age is not a very promising policy to deal with the demographic challenge; immigration policies have therefore been suggested as a countermeasure to the demographic challenge (Kreiger, 2014).To deal with the consequences of aging population, encouraging the older to keep working for longer is a oneway solution.On the other hand, another solution is to promote immigration, usually by young people.These young immigrants take up jobs in the destination country and contribute to public finances, leading to an increase in economic growth along with growth in the labor supply (Muysken, 2008).Thus, immigration is vital to tackle the demographic challenge, as immigrants can increase the working-age population and, hence, financial pressure to pay pensions can be eased.Existing literature reports the positive contribution made by immigrants in Australia.Dean (2018) found a significant positive effect of immigrants on the age structure of Australia.If migration to Australia was cut to zero by 2053, 28.4% of Australians would be 65 years of age or over.However, if inward migration grew by 300,000, then, 21.2 percent would be.It can be concluded, therefore, that international migration has a big long-term impact on destination countries, as it increases the working-age population and grows the tax base.As a result, to manage the consequences of aging population, both aging workforce and immigration policies together play an important role.Hence, this research hypothesized that: H4: There is a positive relationship between aging workforce and immigration policies.

Youth unemployment
Within the existing literature, there is a number of studies that examined the impact of immigration on unemployment with varying conclusions, however, most of the studies indicated a negative relationship between immigration and youth unemployment.Birrell  H5: There is a positive relationship between immigration policies and youth unemployment.

Mediating impact of higher retirement age and immigration policies
Extant research acknowledges the direct relationship between aging workforce and higher retirement age (Kondo, 2016), higher retirement and youth unemployment (Isiaka & Woli-Jimoh, 2017) and aging workforce and youth unemployment (Boeri, Garibaldi, & Moen, 2016).Therefore, aging workforce is related to higher retirement age, which is further related to youth unemployment, while aging workforce is also related to youth unemployment.Hence, available empirical findings establish that higher retirement age mediates the relationship between aging workforce and youth unemployment.Similarly, aging workforce and immigration policies are related as together these can help to tackle the demographic challenge, however, immigration policies can be a potential threat to the youth unemployment.As a result, immigration policies demonstrated to mediate the relationship between aging workforce and youth unemployment.Therefore, in light of the evidence from previous studies, this study hypothesized that: H6: Higher retirement age mediates the relationship between aging workforce and youth unemployment.
H7: Immigration policies mediate the relationship between the aging workforce and youth unemployment.

Research model
Based on the findings of literature review, a conceptual framework is proposed (Figure 1).The research model predicts the (i) relationship between aging workforce, higher retirement age, immigration policies and youth unemployment and (ii) high- er retirement age and immigration policies mediates the relationship between aging workforce and youth unemployment.This conceptual framework grounded in lump of labor theory, which postulates that the amount of work to be done in the world is fixed, and if the amount of work done by one worker increases, then, the amount of work left to do by another worker is reduced.In the case of an aging workforce and immigration policies, this underpinning theory aligns with the assumption that if an older worker does not retire and chooses to stay in the workforce for longer, it means that one less job is available for a young worker.Similarly, in case of immigration policies, immigrants are said to take jobs away from local workers.

Sample and data collection procedure
A survey questionnaire was used to collect the data from the business students studying in Toi-Ohomai Institute of Technology in Rotorua and Tauranga campuses.215 responses were received using a convenience non-probability sampling method.The researchers conducted the Mahalanobis distance test and found that 32 out of 215 responses as outliers.Hence, these 32 responses were deleted from the data set.After the deletion, the total number of respondents was 183.This sample size was consistent with the recommended statistical rule of thumb by Roscoe who proposed that sample sizes more than 30 and less than 500 are suitable for most research (Hills, 1998).By comparing early and late respondents, no response bias was evident in the sample (Armstrong & Overton, 1977).The sample consisted of 41 percent male and 59 percent female with most of the participants of age group over 30 (38.8%).

Measurements and data analysis
All the measurement items were adapted from the previous literature and all the latent variables were measured using a 5-point Likert scale (1 = strongly disagree; 5 = strongly agree).The measure-  1.
Bryne (2010) suggested a factor loading of 0.50 or higher to be significant in this study.Therefore, Table 1summarizes all the measurement items used in the analyses.The findings indicate that almost all the measurement items have met the cut off criterion for factor loadings suggested by Bryne (2010).The items with negative and low factor loadings were considered for deletion in the final analysis.The Cronbach's alpha of a loading 0.718 was achieved for the aging workforce, while the Cronbach's alpha of 0.736 was attained for immigration policies.Similarly, for higher retirement age and youth unemployment, the value of Cronbach's alpha achieved was 0.814 and 0.789, respectively.The Cronbach's alpha ranges from 0.71 to 0.81, confirming that the measurement items were internally consistent.It can also be noticed from Table 1 that the constructs have exceeded the recommended criterion of 0.7, suggested by Hair, Black, Babin, Andersen, and Tatham (2010) for the composite reliability.This supports the overall validity of the construct measures used.

Measurement model
Following the above analyses, structural equation modelling (SEM) using the AMOS software was used to test the hypothesized relationships (H1-H5).As shown in Figure 1, a SEM model was estimated in which aging workforce was an independent variable, higher retirement age and immigration policies were mediating variables and youth unemployment was dependent variable.The research findings obtained through SEM analyses of the structural model are shown in Figure 2.
The findings from the structural equation modelling indicated that 46.6% of the variation in the immigration policies and 64.2% of the variation in the higher retirement age is explained by aging workforce.Furthermore, the cumulative result reveals that the 75.3% of variability in youth unemployment is explained by joint effect of an aging workforce, immigration policies, and higher retirement age.The detailed information about the variance explained (R 2 ) is provided in Table 2.

Hypotheses testing
To test the hypothesized relationships, structural equation modelling (SEM) using the AMOS software was used.Five hypotheses were formulated based on direct relationships between aging workforce and youth unemployment, immigration policies and higher retirement age, and the impact of immigration policies and higher retirement age on youth unemployment.The analysis of five direct structural paths was based on an error level of 0.05.This level indicates 95% confidence that if the data were collected over time, the results would be the same.In Table 4, the results show that aging workforce was significantly related to higher retirement age (standardized estimate .801),immigration policies (standardized estimate .683), in support of H2 and H4.Hypothesis 1 and 5 are not supported as aging workforce (p-value .886)and immigration policies (p-value .395)were not sig-nificantly related to youth unemployment.Lastly, Hypothesis 3 is supported, as higher retirement age (standardized estimate .78)was significantly related to youth unemployment.The result of hypotheses testing is presented in Table 4.

Mediation effects
Both immigration policies (IP) and higher retirement age (HRA) were postulated as mediators the relationship between aging workforce and youth unemployment.This study followed procedures suggested by Preacher and Hayes (2008) to test mediation effects.The indirect and direct effects between the predictor and outcome constructs were estimated to assess mediation effects.The results in Table 5 show that H6andH7 are supported, as immigration policies and higher retirement age fully mediate the relationship between aging workforce and youth unemployment.Full mediation was established, because indirect effects estimates are greater than direct effects estimates.Please refer to Table 5 to understand the mediation effect.

Methodological implications
Along with the theoretical contributions, this research has contributed to the methodological knowledge.The present study has identified relevant measurement instruments for the conceptualized variables and tested these relationships using SPSS and AMOS (SEM).Past research carried out a quantitative survey in China to investigate the perceptions of people to investigate the impact of increase in the retirement age on youth employment (Li, Xi, & Ning, 2016).However, present research reports that there are very limited quantitative researches conducted with identified constructs (aging workforce, higher retirement age, youth unemployment, and immigration policies).Hence, the current research addressed this gap by undertaking similar quantitative research.

Managerial implications
In terms of managerial implications, the findings of this study suggest major implications for policymakers and government agencies whose main concern is to plan and implement employment policies to provide better access to labor market for everyone.First, the findings highlight that any increase in the retirement age will also increase youth unemployment.The past research shows that policies introduced by the government to increase the retirement age benefit the government and older; however, the present study suggest that higher retirement age negatively impacts the youth unemployment.Therefore, a major implication of this study is that policymakers and government agencies need to plan and introduce better employment policies for older people and youth.Second, the findings established that immigrants do not crowd native workers out of the labor market.This result has provided the empirical evidence that immigration policies implemented by the government have a positive impact on the labor market.Third, the findings revealed that immigrants can potentially slow population aging, can fill jobs and provide services needed by the aging population, as they complement the skills of native workers and represent an important contribution to population growth (Kreiger, 2014).Therefore, the study suggests that policymakers should encourage larger immigration flows of skilled workers who will contribute to society.This would help mitigate the consequences of an aging population along with meeting labor shortages.

CONCLUSION
This paper has investigated the impact of an aging workforce, higher retirement age and immigration policies on youth unemployment.The study provides evidence that higher retirement age has a negative impact on youth employment.Therefore, there is a need to employ relevant strategies in order to tackle the higher rates of youth unemployment.The introduction of the higher retirement age policy is a great event to encourage the older to stay in the workforce for longer.However, the government must adequately consider the negative effects which this higher retirement age policy may have on youth employment and, hence, active and effective measures must be taken to deal with them.Under the severe unemployment rates for young people, policymakers and government agencies should consider the crowding out effect of higher retirement age on youth employment.The findings from this study provide a sound argument in support of more youth employment compared to older people.If this issue is not urgently addressed, likely consequences could be the youth involvement in crimes, insecurity in the nation and other long-term consequences of unemployed people.Despite the achieved findings, this study has some limitations.First, there are various other determinants of youth employment, besides those focused on in this study (aging workforce, higher retirement age, and immigration policies).
Consequently, the study's focus is limited to the impact of an aging workforce, higher retirement age, and immigration policies on youth unemployment.Future researchers might, therefore, explore the other determinants of youth unemployment, which remain unexplained in this study.Second, the current study deals with snapshots of business students' perceptions of the impact of an aging workforce, higher retirement age, and immigration policies on youth unemployment within a short time frame.Hence, the cross-sectional design of the research may be a limitation.Lastly, the other limitation observed by the researchers is the sample of 183; in multivariate analysis, this small sample is a methodological limitation.Some of the limitations of this research can be addressed by emphasizing the areas for future research.The current research focused on the impact of three variables on youth unemployment; the study suggests that there is a need for future research to study in detail, other determinants of youth unemployment such as employer attitudes, education, and training and the skills of young people (Ministry of Social Development, 2015).The authors conducted a detailed literature review to establish that aging workforce, higher retirement age, and immigration policies affect the youth unemployment.
Likewise, it will be important for future researchers to conceptualize other constructs for measuring youth unemployment.Although the research findings have shown that the aging workforce showed a positive, but insignificant impact on youth unemployment, the researchers believe that further investigation is needed due to the mixed opinions of researchers in past studies of the impact of an aging workforce on youth employment.Furthermore, a limitation of this study was that it used a cross-sectional design, so future research is needed to apply longitudinal design to the model, to establish causative relationships.

Table 3 .
Goodness of fit index for the model

Table 4 .
Results for the direct relationships