Modeling the Impact of Raising the Retirement Age on Unemployment and Wages in Russia

The article assesses the impact of raising the retirement age on unemployment and wages in Russia. The study defines two tasks in order to model this impact. The first task requires to calculate the change in the average wage, provided that the number of jobs will meet the increased need. In the second task, the number of jobs is steady. The modeling of the impact was assessed by constructing a regression relationship between wages and unemployment, and differences in age groups were taken into account by introducing fictitious shift and tilt variables into the model. The article presents the results of modeling for the case of raising the retirement age by one year. According to calculations completed for the first and second task, after raising the retirement age by one year, the wages will decline. These calculations have shown that, even under favorable conditions in the Russian labor market, the wages will fall and, therefore, it would be impossible to ensure the financial stability of the pension system by raising the retirement age. Lower wages will reduce the revenues of the Pension Fund of Russia, while higher unemployment rate will increase the expenses on unemployment benefits.