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Dissecting the Pandemic Retirement Surge

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Abstract

One of the most pressing questions facing policy makers is how quickly the labor force might return to its pre-pandemic strength. Answering this question requires understanding the employment and retirement trajectories of older workers in the pandemic. The labor force is roughly 3.8 million workers short of where it would be if we still lived in the pre-Covid economy, and nearly half of this shortfall is accounted for by those 55 and older. Meanwhile, the retired share of the population is roughly 2 percentage points above its pre-pandemic trend line (Davis, 2021). Dissecting the Pandemic Retirement Surge finds that: In explaining the sharp increase in the retired share since Covid-19 hit, the drop in “unretirement,†that is, the decrease in flows from retirement to employment, plays only a minor role. The most important driver of the recent increase in retirements consists of higher flows into retirement among workers who were employed in the year before the pandemic. The retirement of workers who became unemployed due to the pandemic also contributed significantly to the increased retired share.

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  • Owen Davis & Siavash Radpour, 2021. "Dissecting the Pandemic Retirement Surge," SCEPA publication series. 2021-05, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapb:2021-05
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    Keywords

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    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
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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