MOBILITY FROM PRERETIREMENT TO POSTRETIREMENT JOB

While the normative pattern of retirement is complete cessation of labor force activity, approximately one-third of men work during their retirement. This research focuses on such "working-retirees" by investigating the prevalence and patterns of occupational mobility from pre- to postretirement job, as well as the impact that institutional constraints on (re)employment in later life may have on the chances of occupational mobility. Using data from the older men's cohort of the National Longitudinal Surveys, a sample of working-retirees was extracted from men who retired between 1967 and 1978. Results showed a substantial amount of occupational mobility among the working-retired. The structure of mobility was found to be similar to younger labor force participants in that most mobility consists of moves to adjacent occupational categories. Unlike career mobility of nonretired workers, however, the large majority of moves constituted downward mobility. Using the economic segmentation perspective, log-linear and logistic regression analyses indicated that working-retirees whose preretirement jobs were in the core sector were more likely to experience occupational mobility. As a more specific indicator of bureaucratic control of the labor force, industry-level pension coverage rates were used in the logistic regressions and higher rates of pension coverage were found to result in a greater likelihood of mobility. These results indicate that the considerable occupational mobility experienced by working-retirees is partially the result of structural constraints on the employment of older men.     

The challenge of an aging work force: keeping older workers employed and employable

This article reviews labor-force trends and older-worker employment policies in Japan and the United States. Both countries have aging work forces, but Japan's labor force is and for some time has been older than that of the United States. Japan's Ministry of Labor began addressing older-worker issues over 30 years ago and in the ensuing years has promulgated numerous initiatives to extend working life. Mandatory retirement, however, remains both legal and common in Japan, yet labor-force participation rates are higher for older persons in that country than in the United States, where mandatory retirement is illegal. Japan's older-worker programs and policies clearly seem to have an impact on labor-force rates, although those rates are dropping among the elderly in Japan as well as in the United States. The transferability of these programs and policies to the United States is discussed.     

The Challenge of an Aging Work Force

This article reviews labor-force trends and olderworker employment policies in Japan and the United States. Both countries have aging work forces, but Japan's labor force is and for some time has been older than that of the United States. Japan's Ministry of Labor began addressing older-worker issues over 30 years ago and in the ensuing years has promulgated numerous initiatives to extend working life. Mandatory retirement, however, remains both legal and common in Japan, yet labor-force participation rates are higher for older persons in that country than in the United States, where mandatory retirement is illegal. Japan's older-worker programs and policies clearly seem to have an impact on labor-force rates, although those rates are dropping among the elderly in Japan as well as in the United States. The transferability of these programs and policies to the United States is discussed.     

Demographic and employment shifts: implications for benefits and economic security

This Issue Brief examines factors affecting the population's age distribution and composition, such as mortality rates, fertility rates, and immigration. In addition, it examines factors affecting labor force composition, such as immigration, increased labor force participation of women, and retirement trends, and discusses the potential impact of these changes on publicly financed programs: Medicare, Medicaid, Social Security, and federal employee retirement systems. The discussion also highlights the implications of these population and labor force changes on employers, employees, and retirees. The elderly population--now 31.8 million, representing 12.6 percent of the population--is projected to experience tremendous growth between 2010 and 2030, when the baby boom generation reaches age 65, rising from 39.7 million, or 13.3 percent of the population, to 69.8 million, or 20.2 percent of the population. Growth in the elderly population has implications for retirement and health care systems. Population projections suggest that the traditionally pyramid-shaped work force, with a proportionately greater number of younger workers than older workers, will be replaced with a more even age distribution. Consequently, significant and continued modifications to benefit packages, such as changes in compensation structures in which earnings automatically rise with age, are likely to occur. Women's labor force participation began to accelerate in the mid-1950s, rising 75 percent among women aged 25-44 in 1991, although there is some indication that this growth may be flattening. With women comprising a greater part of the labor force, employers will be encouraged to develop and implement programs to better accommodate their needs. Increased life expectancy, a decreased percentage of entry level workers, changes in Social Security's normal retirement age from 65 to 67, and employer plans to raise the normal age of retirement or provide incentives to delay retirement, could raise the average age of retirement. However, other factors, such as poor health, other sources of retirement income, and individual preferences for retirement, could still dominate the retirement decision. The combination of increased average life expectancy guaranteeing more years of retirement to finance and rising dependency ratios increases the future cost of Social Security financing. Medicare financing is also an important policy issue because the program is projected to experience financial difficulties in the short term, resulting from explosive health care costs. In addition, Medicaid expenditures are consuming increasing amount of shrinking state budget resources--a large portion of which is used to finance nursing home care for a growing elderly population.     

Vulnerability in old age: The issue of dependency in American society

The American focus on the importance of self-sufficiency and independence stands in contrast to the economic trends of recent decades that have led to an increased number of adults standing outside the productive core of economic activity. This “burden of dependency” has been manufactured by public policies designed to reconstitute the labor force and redistribute the burden of unemployment largely through the growth in retirement. Recently the success of income maintenance programs developed to improve the financial accessibility of retirement for older workers has begun to undercut the legitimacy of their status as dependents. This article examines that role of dependency, and argues that the social processes that produce dependency among our elders are not substantively different from the processes that affect younger age groups. Consequently the questions of distributive justice that are involved in the dependency of the elderly are questions that relate to members of all age groups who occupy positions of disadvantage in the economic structure.     

SOCIAL SECURITY AND RETIREMENT DECISIONS

One of the most striking features of the postwar U.S. economy has been the rapid decrease in the labor force participation of the elderly at a time when the health of this group has been improving. In spite of this, previous research, based on retrospective interviews with the retired population, usually concludes that poor health accounts for the overwhelming majority of retirements. This paper suggests that nothing could be further from the truth. Using data from the Panel Study of Income Dynamics, we follow a cohort of white married males through their sixties to estimate a model of retirement behavior. Using several definitions of retirement suggested in the literature, we find that the two key policy parameters of the social security system—the income guarantee and the implicit tax on earnings—exert an enormous influence on retirement decisions. For example, our results suggest that a decrease in the implicit tax rate on earnings from one-half to one-third would reduce the annual probability of retirement by about fifty percent! Applying the coefficient estimates to time series data on the labor force participation of the elderly implies that the social security system has been the major factor in the explosion in earlier retirement.     

Economic Trends,Politics, and Employment Policy for Older Workers

The rising interest among policymakers in developing employment policies for older persons can be traced to several sources. Two of these-concerns about the financing of retirement benefits and fears about possible future labor shortages-are shaping employment policies in ways that have undesirable consequences for older workers who are in poor health and who lack the economic resources to be able to afford retirement. In contrast, employment policies that operate by providing work incentives, rather than retirement disincentives, do not have discriminatory impacts on these subgroups of the older population.     

Public Policy and the Plans and Preferences of Older Americans

This study compares the retirement plans and preferences of a recent sample of 3,500 men and women of pre-retirement age- 50 to 64. The data suggest that a minority of older workers expect to retire earlier than they really want to, and that many would delay retirement if they faced different terms and conditions of employment. Although most older Americans cannot or do not want to work, many do, and they represent a significant underutilized labor market resource.     

Public policy and the plans and preferences of older Americans

This study compares the retirement plans and preferences of a recent sample of 3,500 men and women of pre-retirement age-50 to 64. The data suggest that a minority of older workers expect to retire earlier than they really want to, and that many would delay retirement if they faced different terms and conditions of employment. Although most older Americans cannot or do not want to work, many do, and they represent a significant underutilized labor market resource.     

EMPLOYER AND OCCUPATIONAL INSTABILITY IN TWO COHORTS OF THE NATIONAL LONGITUDINAL SURVEYS

Previous research on trends in employer and occupational stability found evidence of declines in stability among men but contradictory results for women. I provide new insights into these patterns by simultaneously analyzing employer and occupation changes, and by examining a more detailed set of transition types. I show that the patterns for women are quite similar to those of men but are masked by declines in transitions from employment to out of the labor force. Finally, I find that while some of the changes may bring increased opportunities for wage increases, they bring even greater risks of wage losses.     

Increasing older persons' employment in Finland: in search of a new strategy.

Using Finland as a case study, it is argued that early retirement will probably no longer be used on a large scale to reduce older-worker labor-force participation and unemployment among older workers. Instead, new strategies are needed to enhance the ability of older workers to remain productive and in the labor force, and to facilitate the reintegration of unemployed older persons back into working life. Both tasks require massive pioneering efforts. Reducing unemployment rates among older workers, particularly, requires completely new kinds of labor-market measures.     

Recent developments in the employment and retirement of older workers in Germany

Against a background of an aging population, rising social security costs, and foreseeable labor and skill shortages, there have been public policy changes affecting older workers in Germany. Labor-market related initiatives aim at an increase of labor force participation among this group. Enterprise-related, active age-management strategies aim at improving occupational conditions of aging workers. In this context, prolonging the working life must be seen as one option of "active aging." Another view of the current retirement discussion is the question of how the unused potential of Germany's younger, early-retired seniors can be exploited. Active aging has become a social duty nowadays, with the intention that older persons contribute to society to avoid generational conflicts. In the future, active aging will preserve the competitiveness of enterprises and of the entire economy, despite an aging labor force. But gerontological research points out that different options to carry out individual life plans of active aging are also required. This article reviews the changes in public policies towards older workers and includes the findings of a project that illustrates good practice to combat age barriers in the labor world.     

CONFLICTING VIEWS ON THE EFFECT OF OLD-AGE AND SURVIVORS INSURANCE ON RETIREMENT

The literature explaining the sharp drop in labor force participation of the elderly in recent decades is examined. Several recent studies made by economists outside the Social Security Administration have found the impact of OASI to be much more important than was found by surveys made within the social security system. An examination of census and manpower data lends support to the view that OASI has had an important role in encouraging retirement at earlier ages. The drop in labor force participation among the elderly has impeded government efforts to improve the economic condition of elderly persons.     

Re-examining female labor supply responses to the 1994 Australian pension reform

Many governments are aiming to extend working lives by raising the age at which people can claim retirement pensions. This makes it vital to understand how these policies affect retirement decisions. In this paper, I revisit the labor supply effects of a major Australian reform that increased women’s pension age from 60 to 65. Atalay and Barrett (2015) studied these effects using repeated household surveys and a differences-in-differences design in which male cohorts form the comparison group. They estimate that the reform increased female labor force participation by 12 percentage points. Using earlier data, I show that the parallel-trends assumption did not hold before the reform because of a strong female-specific trend in participation rates across the relevant cohorts. Accounting for this trend, the estimated effect on female participation falls by two-thirds and becomes statistically insignificant at conventional levels. This highlights the importance of carefully assessing and controlling for trends across cohorts when evaluating pension reforms, which are typically phased in across cohorts.

     

Increasing Older Persons' Employment in Finland

ABSTRACT

Using Finland as a case study, it is argued that early retirement will probably no longer be used on a large scale to reduce older-worker labor-force participation and unemployment among older workers. Instead, new strategies are needed to enhance the ability of older workers to remain productive and in the labor force, and to facilitate the reintegration of unemployed older persons back into working life. Both tasks require massive pioneering efforts. Reducing unemployment rates among older workers, particularly, requires completely new kinds of labor-market measures.     

Take Me “Home”: Return Migration among Germany's Older Immigrants

This paper examines the determinants of return migration as foreign‐born men approach old age in Germany. Return migration in later life engages a different set of conditions from return migration earlier on, including the framing of return as a possible retirement strategy. Using 23 years of longitudinal data from the German Socioeconomic Panel, this paper investigates how social and economic resources of immigrant men influence decisions to return “home.” Results suggest that immigrants from former guest worker recruitment countries within the European Union are more likely to return than non‐EU immigrants. In addition, return migrants are “negatively selected” so that those with the least education and weakest attachments to the labor force are more likely to emigrate. However, findings vary greatly depending on the immigrant's age and country of origin. Results from this paper highlight the heterogeneity of older immigrants and the factors that motivate their return “home”.     

Labor Supply of Older Men: Does Social Security Matter?

This article presents evidence of a negative and significant relationship between the level of Social Security wealth and the labor force participation of older men. The empirical analysis utilizes a panel data set containing participation, wage, and Social Security information for cohorts defined by birth year and educational attainment from 1967 to 1996. Increases in Social Security wealth levels are found capable of explaining most of the observed decline in labor force participation rates of older men since 1967.     

RETIREMENT,PERSONALITY, AND WELL‐BEING

This study investigates how two sources of individual heterogeneity—personality and gender—impact the well‐being effects of retirement. Using data on older men and women from the British Household Panel Survey and its continuation, Understanding Society, we estimate the causal effect of retirement on satisfaction with overall life and domains of life in the presence of personality characteristics. As retirement is often considered to be a choice and thus may be endogenous to individual‐level characteristics, we use the eligibility ages for basic state pension in the United Kingdom as instruments for retirement. We find that retirement increases leisure satisfaction of both males and females but not necessarily life satisfaction and income satisfaction. We further show that certain personality characteristics affect the well‐being of female retirees. For males, however, personality does not seem to matter in how they cope with retirement. (JEL I31, J26, A12, C23)     

Devolution of employment and training policy: the case of older workers

The case for the devolution of employment and training programs has traditionally been based on the supply side argument that state and local governments are in the best position to assess the training needs of their disadvantaged workers. We provide a different perspective by focusing on the demand side of the labor market and the link between aiding older workers and fostering economic growth. We illustrate the importance of this focus by examining the labor market in Massachusetts, where the full employment economy of the late 1990s resulted in serious labor supply bottlenecks. Older workers, whose ranks are growing rapidly, provide the largest known labor reserve for meeting these labor supply deficits in the next decade. Tapping this reserve, however, means improving skills, deferring retirement, bringing older persons back into the labor market, and increasing full-time employment. Massachusetts already has the policy tools needed to train older workers to fill emerging job needs, but these policies will need to be substantially upgraded and reoriented. Too little funding, an emphasis on short-term programs, lack of coordination among programs, weak linkages to the private sector, and the limited flexibility of human resources practices in both the private and public sectors have left both government programs and employers ill-prepared to utilize fully the older worker labor reserve.     

Cohort Differences in Joint Retirement: Evidence from the Health and Retirement Study

The dramatic rise and sustained participation of recent cohorts of women in the labor force has coincided with their increased attachment to the labor market. In this paper we use twelve waves of the Health and Retirement Study (1992-2014) and investigate how married couples belonging to more recent birth cohorts compare with their predecessors in terms of coordinating their retirement decisions. Using a multinomial logit model we estimate the labor force dynamics of dual-earner married couples and find that couples with wives belonging to more recent birth cohorts are less likely to jointly exit the labor force. Further, this declining cohort trend in joint retirement can only partially be explained by commonly observed socio-economic, employment, and health related factors that affect retirement decisions, suggesting an important role for cohort changes in preferences and social norms such as preference for work and attitudes toward gender roles.