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Shocks, Institutions, and Secular Changes in Employment of Older Individuals

In: NBER Macroeconomics Annual 2021, volume 36

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  • Richard Rogerson
  • Johanna Wallenius

Abstract

Employment rates of males aged 55-64 have changed dramatically in the OECD over the last 5 decades. The average employment rate decreased by more than 15 percentage points between the mid-1970s and the mid-1990s, only to increase by roughly the same amount subsequently. One proposed explanation in the literature is that spousal non-working times are complements and that older males are working longer as a result of secular increases in labor supply of older females. In the first part of this paper we present evidence against this explanation. We then offer a new narrative to understand the employment rate changes for older individuals. We argue that the dramatic U-shaped pattern for older male employment rates should be understood as reflecting a mean reverting low frequency shock to labor market opportunities for all workers in combination with temporary country specific policy responses that incentivized older individuals to withdraw from market work.
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Suggested Citation

  • Richard Rogerson & Johanna Wallenius, 2021. "Shocks, Institutions, and Secular Changes in Employment of Older Individuals," NBER Chapters, in: NBER Macroeconomics Annual 2021, volume 36, pages 177-216, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14552
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    References listed on IDEAS

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    Cited by:

    1. Wallenius, Johanna, 2022. "R(a)ising employment of older individuals," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    2. Zhixiu Yu, 2021. "Why Are Older Men Working More? The Role of Social Security," Working Papers 2021-041, Human Capital and Economic Opportunity Working Group.
    3. Tomaz Cajner & Javier Fernández-Blanco & Virginia Sánchez-Marcos, 2021. "Widening Health Gap in the U.S. Labor Force Participation at Older Ages," Working Papers 1298, Barcelona School of Economics.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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