Trends in Labor Force Participation of Older Workers in Spain

Similar to other OECD countries, labor force participation rates of Spanish older workers were falling until the mid-1990s when there was a reversal in the trend. Labor force participation rates of Spanish men have been increasing since then, although at a slower pace than in other OECD countries. We explore to what extent several factors can be behind these trends. First, we conclude that the (old-age) social security system (except perhaps for the disability component) has played a marginal (at most) role on this reversal given the lack of major changes in social security benefits until the last set of reforms in 2011 and 2013. Second, we also rule out that changes in the health status of the population are responsible for the reversal of this trend. Finally, we find that aggregate economic conditions, and differences across cohorts in both the skill composition and the labor force attachment of wives are potential drivers of these observed changes.