>When more older people are working, they are earning money that they will then spend in ways that may create more jobs for young people, for example.

But... older people earn 2-3 times more than a younger one (at, least in Portugal). So for each old people there could be 2-3 younger working.

So if you lay off 100 old people you can get ~2500 younger people working. Of course, I doubt that the productivity will be lower per person, but here you are paid by how old are you (not, experience) * what you know