Future Directions for the Demography of Aging Proceedings of a Workshop (2018) / Chapter Skim
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8 The Demography of Retirement - Courtney Coile
8 The Demography of Retirement - Courtney Coile
Pages 217-246
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From page 217... ...
The age of labor force withdrawal is the other factor that determines the length of retirement, and this too changed dramatically. In the past, it was typical to work at even the oldest ages; the labor force participation rate of U.S.
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From page 218... ...
Many factors may have contributed to this trend, including improvements in longevity and health, increases in education and sector shifts in the economy, and increasing labor force participation by women, which may induce husbands to work longer, due to the complementarity of leisure. Public and private pensions are also likely to have played a central role.
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RETIREMENT PATTERNS AND TRENDS Labor Force Participation In the predecessor to this volume, Quinn and Burkhauser (1994) suggested that the trend toward earlier retirement for men in the United States may have stopped or even reversed.
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FIGURE 8-2 U.S. female labor force participation rate by age, 1980–2016.
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. the labor force participation rate for men ages 60 to 64 in selected countries from 1980 to the present.
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These spikes correspond to the traditional early and full retirement ages for Social Security and the Medicare eligibility age. Evidence suggests that these programs do contribute to the spikes.
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From page 223... ...
They concluded that "retirement is more a White experience than a Black experience." Indeed, a focus on labor force participation rates by chronological age ignores differences in life expectancy across racial and education groups and across birth cohorts. Groups that have a longer life expectancy at a given age, say age 65, may be expected to have higher labor force participation rates, reflecting the additional years of retirement consumption to be financed, as well as social norms about the share of adult life spent in work and retirement.
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From page 224... ...
"Gradual retirement" is a g eneric term that refers to a gradual withdrawal from the labor force by any means that results in reduced work effort (Kantarci and Van Soest, 2008) ; this term could encompass phased retirement, bridge jobs, and transitions to self-employment.
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From page 225... ...
To allow for some comparison over time, averages are shown for the years 1980 to 1994 and 1995 to 2016, corresponding to the periods in which male labor force participation was falling and rising. For men, part-time work rises with age, with 5 percent of men ages 55 to 59 working part time in the more recent period, versus 10 percent of men ages 65 to 69.
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From page 226... ...
noted that the relative lack of mobility in European labor markets, as compared to the U.S. market, may increase the appeal of phased retirement rather than a bridge job for those seeking part-time work.
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From page 227... ...
A self-report of a work-limiting disability is directly relevant to labor supply decisions and available in many surveys. However, responses may not be comparable across individuals and may be influenced by the availability of DI benefits or by the individual's work decision (Waidmann et al., 1995)
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(2014) defined disability in terms of impairments in activities of daily living and instrumental activities of daily living and concluded that disabled life expectancy shrank and disability-free life expectancy rose between 1991 and 2009.
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attributed this growth to three factors: a 1984 law that loosened medical eligibility, the rise in women's labor force participation and DI eligibility, and the rise in DI benefits relative to income for low-income workers. L iebman (2015)
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includes data for 14 countries, and there are separate studies in China, Costa Rica, England, India, Ireland, Japan, Korea, and Mexico. These studies collect much of the same data as the core HRS, enabling international comparisons as well as within-country studies.8 A second data advance during the past quarter-century is the increase in researcher access to administrative datasets, such as Social Security earnings and benefits records and income tax records.
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Many of the best recent papers in the retirement literature use such techniques. Second, structural models have continued to evolve and to be an important part of the retirement literature.
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From page 232... ...
The effect of public and private pensions on retirement has been the subject of much research. One reason for the strong interest is that the longterm decline in labor force participation of older men occurred over the same period that public and private pensions expanded dramatically in the share of covered workers and in generosity.
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. The DI program may affect labor force participation at older ages if medical screening is imperfect and access to the program is not limited to those who are unable to work.
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The earlier discussion of disability measures hinted at some of the challenges in estimating the effect of health on retirement, such as the potential for self-reported health measures to be influenced by the work decision and the concern that objective measures only imperfectly capture work ability. Like wealth shocks, negative health events may provide compelling evidence of health's effect on retirement if the shocks are unanticipated and unrelated to other factors.
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A literature review on this topic concluded that health insurance is a "central determinant of retirement decisions" (Gruber and Madrian, 2004)
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pension is part of the worker's deferred compensation and also provides an incentive for workers to retire (despite high wages) by having negative accruals in pension wealth after the plan's retirement age, which effectively reduces pay.
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From page 237... ...
Yet, as with health, the educational attainment of the near-elderly population has improved continuously over time. Moreover, the male labor force participation rate for each education group has followed the same U-shaped trend as the overall rate, pointing to a need to look beyond the composition shift in education.9 Another potential factor is rising participation among women, which might encourage men to work longer due to complementarity of leisure between the spouses.
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From page 238... ...
Although there have been considerable advances in mortality and health over time, the evidence of their contribution is less clear. Reconciling Trends in Health and Work The rise in prevalence of DI receipt in the United States runs counter to the trends of longer work lives, rising life expectancy, and (arguably)
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From page 239... ...
DISCUSSION AND DIRECTIONS FOR FUTURE RESEARCH The past few decades have been marked by large increases in labor force participation at older ages and an associated rise in the age of retirement. This trend is occurring against a backdrop of increasing life expectancy, yet improving health does not appear to be the primary driver of the trend.
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From page 240... ...
may provide an opportunity to push further in investigating this topic. A related research issue is that while the retirement literature has long focused largely on supply-side factors that may affect retirement decisions, labor-demand-side topics merit more attention.
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. Retirement patterns and the macro economy, 1992–2010: The prevalence and determinants of bridge jobs, phased retire ment, and reentry among three recent cohorts of older Americans.
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. Retirement incentives and couples' retirement decisions.
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. The effect of disability insurance receipt on labor supply.
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. Labor supply responses to marginal social security benefits: Evidence from discontinuities.
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. Adjusting for Life Expectancy in Measures of Labor Force Participation (Urban Institute Straight Talk on Social Security and Retirement Policy Brief No.
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From page 246... ...
. The work and retirement decisions of older women: A literature review.
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