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Elderly Labor Supply: Work or Play?

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  • Steven Haider
  • David Loughran

Abstract

Approximately 15 percent of individuals over the age of 65 are employed. Due to the apparent reversal in the trend toward early retirement and the aging of the U.S. population, these individuals are becoming an increasingly important part of the labor force. However, very little research has examined labor market behavior in this population. In this paper, the authors examine a series of questions in an attempt to better understand why the elderly continue to work. The results indicate that labor supply is concentrated among the most educated, wealthiest, and healthiest elderly. Despite this, the authors find that the wages of the elderly are low both relative to younger populations and relative to the wages they earned when they themselves were young. Among individuals over the age of 70, the authors find that changes in health status dominate labor market transitions. Overall, the findings suggest that non-pecuniary considerations play an important role in determining elderly labor supply decisions.

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Bibliographic Info

Paper provided by RAND Corporation Publications Department in its series Working Papers with number 01-09.

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Length: 43 pages
Date of creation: Apr 2001
Date of revision:
Handle: RePEc:ran:wpaper:01-09

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References

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  1. Blau, David M, 1994. "Labor Force Dynamics of Older Men," Econometrica, Econometric Society, Econometric Society, vol. 62(1), pages 117-56, January.
  2. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc.
  3. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
  4. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 509-13, August.
  5. Leora Friedberg, 1999. "The Labor Supply Effects of the Social Security Earnings Test," NBER Working Papers 7200, National Bureau of Economic Research, Inc.
  6. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(4), pages 482-501, October.
  7. Shelly J. Lundberg, 1984. "Tied Wage-Hours Offers and the Endogeneity of Wages," NBER Working Papers 1431, National Bureau of Economic Research, Inc.
  8. Mary C. Daly & John Bound, 1995. "Worker Adaptation and Employer Accommodation Following the Onset of a Health Impairment," NBER Working Papers 5169, National Bureau of Economic Research, Inc.
  9. Jonathan Gruber & Peter Orszag, 2000. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," NBER Working Papers 7923, National Bureau of Economic Research, Inc.
  10. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1995. "Why are Retirement Rates So High at Age 65?," NBER Working Papers 5190, National Bureau of Economic Research, Inc.
  11. Kathryn Anderson & Richard V. Burkhauser & Joseph F. Quinn, 1986. "Do retirement dreams come true? The effect of unanticipated events on retirement plans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 518-526, July.
  12. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June.
  13. Joseph F. Quinn, 1999. "Has the Early Retirement Trend Reversed?," Boston College Working Papers in Economics 424, Boston College Department of Economics.
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Citations

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Cited by:
  1. Nick Adnett & Stephen Hardy, 2007. "The peculiar case of age discrimination: Americanising the European social model?," European Journal of Law and Economics, Springer, vol. 23(1), pages 29-41, February.
  2. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2013. "The effect of firms' partial retirement policies on the labour market outcomes of their employees," Economics Working Paper Series 1316, University of St. Gallen, School of Economics and Political Science.
  3. Leonardo Gasparini & Javier Alejo & Francisco Haimovich & Sergio Olivieri & Leopoldo Tornarolli, 2007. "Poverty among the Elderly in Latin America and the Caribbean," CEDLAS, Working Papers 0055, CEDLAS, Universidad Nacional de La Plata.
  4. Lynn A. Karoly & Julie Zissmopoulos, 2003. "Self-Employment Trends and Patterns Among Older U.S. Workers," Working Papers, RAND Corporation Publications Department 136, RAND Corporation Publications Department.
  5. Craig L. Garthwaite, 2012. "The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 116-37, July.
  6. Richard Johnson, 2002. "The puzzle of later male retirement," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-26.
  7. Alicia H. Munnell & Dan Muldoon & Steven A. Sass, 2009. "Recessions and Older Workers," Issues in Brief ib2009-9-2, Center for Retirement Research, revised Jan 2009.
  8. Alicia H. Munnell & Steven A. Sass, 2007. "The Labor Supply of Older Americans," Working Papers, Center for Retirement Research at Boston College wp2007-12, Center for Retirement Research, revised Jun 2007.
  9. Lucie Schmidt & Purvi Sevak, 2006. "Taxes, Wages, and the Labor Supply of Older Americans," Working Papers, University of Michigan, Michigan Retirement Research Center wp139, University of Michigan, Michigan Retirement Research Center.
  10. Calvo, Esteban & Haverstick, Kelly & Sass, Steven, 2007. "What Makes Retirees Happier: A Gradual or 'Cold Turkey' Retirement?," MPRA Paper 5607, University Library of Munich, Germany.
  11. Karen Leppel, 2005. "Labor force plans and labor force status," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 12(8), pages 173-196, April.
  12. Larsen, Mona & Pedersen, Peder J., 2012. "Paid Work after Retirement: Recent Trends in Denmark," IZA Discussion Papers 6537, Institute for the Study of Labor (IZA).
  13. Tunga Kantarci & Arthur Soest, 2008. "Gradual Retirement: Preferences and Limitations," De Economist, Springer, vol. 156(2), pages 113-144, June.
  14. Julie Zissimopoulos & Lynn A. Karoly, 2003. "Transitions to Self-Employment at Older Ages: The Role of Wealth, Health, Health Insurance, and Other Factors," Working Papers, RAND Corporation Publications Department 135, RAND Corporation Publications Department.
  15. Vere, James P., 2011. "Social Security and elderly labor supply: Evidence from the Health and Retirement Study," Labour Economics, Elsevier, vol. 18(5), pages 676-686, October.
  16. Steven J. Haider & David S. Loughran, 2003. "How Important Are Wages to the Elderly? Evidence from the New Beneficiary Data System and the Social Security Earnings Test," Working Papers, University of Michigan, Michigan Retirement Research Center wp049, University of Michigan, Michigan Retirement Research Center.
  17. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Minimum Hours Constraints, Job Requirements and Retirement," NBER Working Papers 10876, National Bureau of Economic Research, Inc.

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