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Aging and Labor Force Participation: A Review of Trends and Explanations

In: Aging in the United States and Japan: Economic Trends

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  • Robin L. Lumsdaine
  • David A. Wise

Abstract

The American population is aging rapidly. Persons 65 and over who now constitute about one-fifth of the population will constitute about two-fifths of the population by 2040. In addition, individuals are living longer. Yet the labor force participation of older Americans has fallen dramatically in recent years. This paper discusses this trend and the principal arguments put forth to explain it. The paper is in two parts. The first part reviews trends in labor force participation and associated trends in Social Security (SS) coverage, firm pension plan coverage, and other factors that are likely to be associated with the labor force participation trends, including demographics. The second part of the paper discusses the incentive effects of SS and retirement plans, with emphasis on firm pension plans.
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Suggested Citation

  • Robin L. Lumsdaine & David A. Wise, 1994. "Aging and Labor Force Participation: A Review of Trends and Explanations," NBER Chapters, in: Aging in the United States and Japan: Economic Trends, pages 7-42, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8040
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    2. Robalino, David A. & Zylberstajn, Helio, 2009. "Ex-ante methods to assess the impact of social insurance policies on labor supply with an application to Brazil," Policy Research Working Paper Series 5027, The World Bank.
    3. Courtney Coile & Jonathan Gruber, 2001. "Social Security Incentives for Retirement," NBER Chapters, in: Themes in the Economics of Aging, pages 311-354, National Bureau of Economic Research, Inc.
    4. Ning, Manxiu & Gong, Jinquan & Zheng, Xuhui & Zhuang, Jun, 2016. "Does New Rural Pension Scheme decrease elderly labor supply? Evidence from CHARLS," China Economic Review, Elsevier, vol. 41(C), pages 315-330.
    5. Courtney Coile & Jonathan Gruber, 2004. "The Effect of Social Security on Retirement in the United States," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 691-730, National Bureau of Economic Research, Inc.
    6. Klaus-Jürgen Gern, 2002. "Recent Developments in Old Age Pension Systems: An International Overview," NBER Chapters, in: Social Security Pension Reform in Europe, pages 439-478, National Bureau of Economic Research, Inc.
    7. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    8. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
    9. Alan L. Gustman & F. Thomas Juster, 1995. "Income and Wealth of Older American Households: Modeling Issues for Public Policy Analysis," NBER Working Papers 4996, National Bureau of Economic Research, Inc.
    10. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
    11. David A. Wise, 2001. "Introduction to "Aging Issues in the United States and Japan"," NBER Chapters, in: Aging Issues in the United States and Japan, pages 1-24, National Bureau of Economic Research, Inc.
    12. Cullen, Julie Berry, 2003. "The impact of fiscal incentives on student disability rates," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1557-1589, August.
    13. Alexander Elu Teran, 2006. "The work of Spanish men. A quantitative analysis based on census data, 1900-1970," Working Papers in Economics 153, Universitat de Barcelona. Espai de Recerca en Economia.
    14. Grant M Scobie & John K Gibson, 2003. "Household Saving Behaviour in New Zealand: Why do Cohorts Behave Differently?," Treasury Working Paper Series 03/32, New Zealand Treasury.
    15. Friedberg, Leora, 1999. "The effect of old age assistance on retirement," Journal of Public Economics, Elsevier, vol. 71(2), pages 213-232, February.
    16. Jun Ho Seok & Hanpil Moon & GwanSeon Kim & Michael R. Reed, 2018. "Is Aging the Important Factor for Sustainable Agricultural Development in Korea? Evidence from the Relationship between Aging and Farm Technical Efficiency," Sustainability, MDPI, Open Access Journal, vol. 10(7), pages 1-15, June.
    17. Peter Diamond & Jonathan Gruber, 1997. "Social Security and Retirement in the U.S," NBER Working Papers 6097, National Bureau of Economic Research, Inc.
    18. David A. Wise & Steven F. Venti, 1993. "The Wealth of Cohorts: Retirement Saving and the Changing Assets of Older Americans," NBER Working Papers 4600, National Bureau of Economic Research, Inc.
    19. repec:eee:labchp:v:3:y:1999:i:pc:p:3261-3307 is not listed on IDEAS
    20. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    21. Stephen K. McNees, 1991. "How fast can we grow?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-14.
    22. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
    23. Jonathan Gruber & Jeffrey D. Kubik, 1994. "Disability Insurance Rejection Rates and the Labor Supply of Older Workers," NBER Working Papers 4941, National Bureau of Economic Research, Inc.
    24. Richard Woodbury, 2001. "The Motivations for Business Retirement Policies," NBER Chapters, in: Aging Issues in the United States and Japan, pages 307-334, National Bureau of Economic Research, Inc.

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