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Elderly Labor Supply: Work or Play?

  • Steven Haider
  • David Loughran

Approximately 15 percent of individuals over the age of 65 are employed. Due to the apparent reversal in the trend toward early retirement and the aging of the U.S. population, these individuals are becoming an increasingly important part of the labor force. However, very little research has examined labor market behavior in this population. In this paper, the authors examine a series of questions in an attempt to better understand why the elderly continue to work. The results indicate that labor supply is concentrated among the most educated, wealthiest, and healthiest elderly. Despite this, the authors find that the wages of the elderly are low both relative to younger populations and relative to the wages they earned when they themselves were young. Among individuals over the age of 70, the authors find that changes in health status dominate labor market transitions. Overall, the findings suggest that non-pecuniary considerations play an important role in determining elderly labor supply decisions.

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Paper provided by RAND Corporation Publications Department in its series Working Papers with number 01-09.

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Length: 43 pages
Date of creation: Apr 2001
Date of revision:
Handle: RePEc:ran:wpaper:01-09
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  1. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 482-501, October.
  2. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 509-13, August.
  3. Mary C. Daly & John Bound, 1995. "Worker Adaptation and Employer Accommodation Following the Onset of a Health Impairment," NBER Working Papers 5169, National Bureau of Economic Research, Inc.
  4. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc.
  5. Blau, David M, 1994. "Labor Force Dynamics of Older Men," Econometrica, Econometric Society, vol. 62(1), pages 117-56, January.
  6. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
  7. Leora Friedberg, 1999. "The Labor Supply Effects of the Social Security Earnings Test," NBER Working Papers 7200, National Bureau of Economic Research, Inc.
  8. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1996. "Why Are Retirement Rates So High at Age 65?," NBER Chapters, in: Advances in the Economics of Aging, pages 61-82 National Bureau of Economic Research, Inc.
  9. Lundberg, Shelly J, 1985. "Tied Wage-Hours Offers and the Endogeneity of Wages," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 405-10, August.
  10. Jonathan Gruber & Peter Orszag, 2000. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," NBER Working Papers 7923, National Bureau of Economic Research, Inc.
  11. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June.
  12. Kathryn Anderson & Richard V. Burkhauser & Joseph F. Quinn, 1986. "Do retirement dreams come true? The effect of unanticipated events on retirement plans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 518-526, July.
  13. Joseph F. Quinn, 1999. "Has the Early Retirement Trend Reversed?," Boston College Working Papers in Economics 424, Boston College Department of Economics.
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