IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v24y2010i1p139-60.html
   My bibliography  Save this article

How Longer Work Lives Ease the Crunch of Population Aging

Author

Listed:
  • Nicole Maestas
  • Julie Zissimopoulos

Abstract

Population aging is not a looming crisis of the future -- it is already here. Economic challenges arise when the increase in people surviving to old age and the decline in the number of young people alive to support them cause the growth in society's consumption needs to outpace growth in its productive capacity. The ultimate impact of population aging on our standard of living in the future depends a great deal on how long people choose to work before they retire from the labor force. Here, there is reason for optimism. A constellation of forces, some just now gaining momentum, has raised labor force participation at older ages at just the time it is needed. We examine the most important factors behind the increase in labor force participation realized to date: the shift in the skill composition of the workforce, and technological change. We argue that forces such as changes in the structure of employer-provided pensions and Social Security are likely to propel future increases in labor force participation at older ages. The labor market is accommodating older workers to some degree, and older men and women are themselves adapting on a number of fronts, which could substantially lessen the economic impact of population aging. Age-related health declines and the reluctance of employers to hire and retain older workers present challenges, but the outlook for future gains in labor force participation at older ages is promising.

Suggested Citation

  • Nicole Maestas & Julie Zissimopoulos, 2010. "How Longer Work Lives Ease the Crunch of Population Aging," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 139-160, Winter.
  • Handle: RePEc:aea:jecper:v:24:y:2010:i:1:p:139-60 Note: DOI: 10.1257/jep.24.1.139
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.24.1.139
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mark Duggan & Perry Singleton & Jae Song, 2005. "Aching to Retire? The Rise in the Full Retirement Age and its Impact on the Disability Rolls," NBER Working Papers 11811, National Bureau of Economic Research, Inc.
    2. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    3. Richard W. Johnson & David Neumark, 1997. "Age Discrimination, Job Separations, and Employment Status of Older Workers: Evidence from Self-Reports," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 779-811.
    4. Zissimopoulos, Julie M. & Karoly, Lynn A., 2007. "Transitions to self-employment at older ages: The role of wealth, health, health insurance and other factors," Labour Economics, Elsevier, pages 269-295.
    5. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis.
    6. David Neumark, 2003. "Age Discrimination Legislation in the United States," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 297-317, July.
    7. Joanna N. Lahey, 2008. "Age, Women, and Hiring: An Experimental Study," Journal of Human Resources, University of Wisconsin Press.
    8. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 482-501, October.
    9. T. Schirle, 2007. "Why Have the Labour Force Participation Rates of Older Men Increased Since the Mid 1990s," Working Papers eg0045, Wilfrid Laurier University, Department of Economics, revised 2007.
    10. Costa, Dora L., 1998. "The Evolution of Retirement," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226116082.
    11. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-30.
    12. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1279-1333.
    13. David M. Blau & Ryan M. Goodstein, 2010. "Can Social Security Explain Trends in Labor Force Participation of Older Men in the United States?," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    14. repec:eme:rleczz:s0147-9121(08)28005-2 is not listed on IDEAS
    15. Linda G. Martin & Robert F. Schoeni & Vicki A. Freedman & Patricia Andreski, 2007. "Feeling Better? Trends in General Health Status," Journals of Gerontology: Series B, Gerontological Society of America, vol. 62(1), pages 11-21.
    16. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 135-168.
    17. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    18. Alicia H. Munnell & Steven A. Sass & Mauricio Soto, 2006. "Employer Attitudes towards Older Workers: Survey Results," Work Opportunity Briefs wob_3, Center for Retirement Research.
    19. Tammy Schirle, 2008. "Why Have the Labor Force Participation Rates of Older Men Increased since the Mid-1990s?," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 549-594, October.
    20. Chan, Sewin & Stevens, Ann Huff, 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 484-521, April.
    21. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing," NBER Working Papers 13568, National Bureau of Economic Research, Inc.
    22. Costa, Dora L, 1998. "The Evolution of Retirement: Summary of a Research Project," American Economic Review, American Economic Association, pages 232-236.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:spr:jlabrs:v:50:y:2017:i:1:d:10.1007_s12651-017-0223-7 is not listed on IDEAS
    2. Bellemare, Charles & Sebald, Alexander, 2011. "Learning about a Class of Belief-Dependent Preferences without Information on Beliefs," IZA Discussion Papers 5957, Institute for the Study of Labor (IZA).
    3. Robert W. Fairlie & Kanika Kapur & Susan Gates, 2016. "Job Lock: Evidence from a Regression Discontinuity Design," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(1), pages 92-121, January.
    4. Matthew Hill & Nicole Maestas & Kathleen J. Mullen, 2014. "Source of Health Insurance Coverage and Employment Survival Among Newly Disabled Workers Evidence from the Health and Retirement Study," Working Papers 1040, RAND Corporation.
    5. Marchand, J. & Smeeding, T., 2016. "Poverty and Aging," Handbook of the Economics of Population Aging, Elsevier.
      • Marchand, Joseph & Smeeding, Timothy, 2016. "Poverty and Aging," Working Papers 2016-11, University of Alberta, Department of Economics, revised 20 Nov 2016.
    6. Maria Casanova, 2012. "Wage and Earnings Profiles at Older Ages," Working Papers 2012-001, Human Capital and Economic Opportunity Working Group.
    7. Barslund, Mikkel Marten von Werder & von Werder, Marten, 2016. "Measuring ageing and the need for longer working lives in the EU," CEPS Papers 11349, Centre for European Policy Studies.
    8. Seok G Park, 2012. "Quantifying Impact of Aging Population on Fiscal Space," IMF Working Papers 12/164, International Monetary Fund.
    9. Murrugarra, Edmundo, 2011. "Employability and productivity among older workers : apolicy framework and evidence from Latin America," Social Protection and Labor Policy and Technical Notes 63230, The World Bank.
    10. Lorenzo Burlon & Montserrat Vilalta-Buf�, 2014. "Technical progress, retraining cost and early retirement," Temi di discussione (Economic working papers) 963, Bank of Italy, Economic Research and International Relations Area.
    11. Emma Gorman & Grant M Scobie & Andy Towers, 2012. "Health and Retirement of Older New Zealanders," Treasury Working Paper Series 12/02, New Zealand Treasury.
    12. Soren Nellemann & Oleg Podolskiy & Victoria Levin, 2015. "State of Adult Education in Russia," World Bank Other Operational Studies 22612, The World Bank.
    13. Songül Tolan, 2017. "The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis," Discussion Papers of DIW Berlin 1679, DIW Berlin, German Institute for Economic Research.
    14. Nicole Maestas & Kathleen J. Mullen & David Powell, 2013. "The Effect of Local Labor Demand Conditions on the Labor Supply Outcomes of Older Americans," Working Papers 1019, RAND Corporation.
    15. Pierre Lefebvre & Philip Merrigan & Pierre-Carl Michaud, 2011. "The Recent Evolution of Retirement Patterns in Canada," Social and Economic Dimensions of an Aging Population Research Papers 287, McMaster University.
    16. Ricky Kanabar, 2012. "Unretirement in England: An empirical perspective," Discussion Papers 12/31, Department of Economics, University of York.
    17. 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).
    18. Alejandra Cox Edwards & Estelle James, 2010. "Impact of Social Security Reform on Labor Force Participation Rates of Pensioners and Nonpensioners: Evidence from Chile," Journal of Human Capital, University of Chicago Press, pages 130-172.
    19. Alpert, Abby & Powell, David, 2014. "Estimating Intensive and Extensive Tax Responsiveness: Do Older Workers Respond to Income Taxes?," Working Papers 987-1, RAND Corporation.
    20. Maria Casanova, 2012. "Wage and Earnings Profiles at Older Ages," 2012 Meeting Papers 1166, Society for Economic Dynamics.
    21. Robert Clark & Melinda Morrill, 2013. "Increasing Work Life: The Role Of The Employer," Discussion Papers 13-016, Stanford Institute for Economic Policy Research.
    22. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2016. "A new look at technical progress and early retirement," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-39, December.
    23. Chinhui Juhn & Kristin McCue, 2012. "Workplace Characteristics and Employment of Older Workers," Working Papers 12-31, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:24:y:2010:i:1:p:139-60. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.