Question

As the baby boomer generation retires, what should happen to wages and employment? Can you show this graphically?

Short answer

As the baby boomer generation retires, the wage rate would increase while the employment rate will decrease.

Step-by-step solution

Step 1. Baby boomer generation.

The baby boomer generation word, was first introduced after World War two, the generation of the most tactful people of the mid-1960s, who contribute hugely to the World Economy.

Step 2. Graphical Representation.

Wages & Quantity of labor affected by the baby boomer generation.

Step 3. Explanation for the graph.

As the baby boomers generation retires, the number of workers in the labor force decreases, so the supply of labor decreases & the supply curve shift towards the left (S to S₁),

and the wages rate will increase from W to W₁ because when there will be less labor they will demand higher wages, firms will not pay higher wages causing the decline in the employment rate, so the quantity of labor supplied changes from Q to Q₁ because of all this the unemployment rate falls as many workers become discouraged workers.