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Discouraged Workers? Job Search Outcomes of Older Workers

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  • Nicole Maestas

    (RAND)

  • Xiaoyan Li

    (RAND)

Abstract

Many have suggested we adopt policies that explicitly encourage the elderly to work. Behind this suggestion is the assumption that if an older person desires a job, one will be found; however, little is known about the extent to which this is true, and in the Health and Retirement Study, many more respondents say they expect to work after retirement than actually undertake work. This raises an important question: To what extent can the elderly readily find suitable jobs? In the context of a theoretical job search model, we examine the decision to search for a job and the probability of transitioning to employment using a large sample of non-workers from the Health and Retirement Study. The effects of both supply-side factors (individual characteristics) and demand-side factors (local labor market conditions) are estimated. We find employment transition rates are relatively low for older searchers: only half of older searchers successfully attain jobs. We examine various explanations for this result, including variation in search intensity, reservation wages, and the possibility of intervening health shocks. We conclude that about 13% of older job searchers becomes a discouraged worker in the sense of being willing to work at the prevailing wage, but unable to find a job.

Suggested Citation

  • Nicole Maestas & Xiaoyan Li, 2006. "Discouraged Workers? Job Search Outcomes of Older Workers," Working Papers wp133, University of Michigan, Michigan Retirement Research Center.
  • Handle: RePEc:mrr:papers:wp133
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    References listed on IDEAS

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    1. Kimball, Miles S, 1993. "Standard Risk Aversion," Econometrica, Econometric Society, vol. 61(3), pages 589-611, May.
    2. Joanna N. Lahey, 2008. "Age, Women, and Hiring: An Experimental Study," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
    3. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-368, September.
    4. Nicole Maestas, 2004. "Back to Work: Expectations and Realizations of Work After Retirement," Working Papers wp085, University of Michigan, Michigan Retirement Research Center.
    5. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 527-588, July.
    6. Blau, David M, 1991. "Search for Nonwage Job Characteristics: A Test of the Reservation Wage Hypothesis," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 186-205, April.
    7. Adriana D. Kugler & Robert M. Sauer, 2005. "Doctors without Borders? Relicensing Requirements and Negative Selection in the Market for Physicians," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 437-466, July.
    8. Madhu Mohanty, 2005. "An alternative method of estimating the worker's reservation wage," International Economic Journal, Taylor & Francis Journals, vol. 19(4), pages 501-522.
    9. Vishwanath, Tara, 1989. "Job Search, Stigma Effect, and Escape Rate from Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 487-502, October.
    10. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey: Part I," Economic Inquiry, Western Economic Association International, vol. 14(2), pages 155-189, June.
    11. Nicole Maestas, 2004. "Back to Work Expectations and Realizations of Work after Retirement," Working Papers WR-196, RAND Corporation.
    12. 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.
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    Cited by:

    1. Nicole Maestas & Xiaoyan Li, 2007. "Burnout and the Retirement Decision," Working Papers wp166, University of Michigan, Michigan Retirement Research Center.
    2. Nicole Maestas & Na Yin, 2008. "The Labor Supply Effects of Disability Insurance Work Disincentives: Evidence from the Automatic Conversion to Retirement Benefits at Full Retirement Age," Working Papers wp194, University of Michigan, Michigan Retirement Research Center.
    3. Peter Z. Schochet & Ronald D'Amico & Jillian Berk & Sarah Dolfin & Nathan Wozny, 2012. "Estimated Impacts for Participants in the Trade Adjustment Assistance TAA Program Under the 2002 Amendments," Mathematica Policy Research Reports 582d8723f6884d4eb7a3f95a4, Mathematica Policy Research.
    4. Ewa Gałecka-Burdziak & Marek Góra, 2016. "The impact of easy and early access to old-age benefits on exits from the labour market: a macro-micro analysis," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.
    5. repec:mpr:mprres:7736 is not listed on IDEAS
    6. Ga?ecka-Burdziak, Ewa & Góra, Marek, 2015. "Impacts of the Availability of Old-Age Benefits on Exits from the Labour Market," IZA Discussion Papers 9014, Institute for the Study of Labor (IZA).

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