Understanding the Aging Workforce Defining a Research Agenda (2022) / Chapter Skim
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From page 142... ...
Changes such as these could negatively affect some older workers, specifically those with disabilities or in declining health who are more likely to have difficulty extending their work life into older ages. In other words, supply-side incentives to work, such as reducing Social Security benefits prior to full retirement, may be undermined by demand-side barriers to work due to age discrimination.
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From page 143... ...
, find that these youths fare worse than those from smaller birth cohorts, at least initially; they earn lower wages and, as a result, have lower employment rates. These effects of a cohort's relative size are interpreted as "relative supply" or "cohort crowding" effects, in which a large cohort shifts out labor supply, leading to lower wages, and hence reductions in employment or labor force participation (due to the reservation wage effect)
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From page 144... ...
. Moreover, because labor force participation rates are low at these ages, policy targeted at this age group can have a greater impact on labor force retention (see Chapter 2)
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From page 145... ...
Effects on Retirement While automation has its direct effects on labor demand, labor supply responses can influence the impact of automation on the labor market for workers in general and older workers in particular. Likely the most important factor is the possibility of workers retraining for the new jobs that automation offers; conversely, automation may have adverse effects on older workers who are unable to modify their skills or do not find the necessary retraining profitable because of their relatively short time horizon in the labor market.
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From page 146... ...
But Burstein, Morales, and Vogel find this has more to do with changes in equipment productivity, in particular because the computer-use differential between college and non-college-educated workers was higher for young and middle-aged workers. Globalization The globalization of economic activity, including trade in goods and services as well as outsourcing, can potentially impact older workers in the United States, just as it can impact workers anywhere else in the world.
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. Indirect evidence of age discrimination also comes from research showing that stronger age discrimination laws (at the federal and state level)
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From page 148... ...
. THE BALANCE BETWEEN LABOR SUPPLY AND LABOR DEMAND The "Lump of Labor" Fallacy In considering what public policies might encourage or discourage the continued employment of older workers -- such as mandatory retirement, retirement policy generally, or policies to reduce age discrimination -- it is important to dispel the fallacy that there is a given "lump sum" amount of paid work to be done in the country at any given time.
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From page 149... ...
document that whereas in the past, in response to large negative shocks to local labor markets (mass layoffs) , the largest contributor to reductions in the labor force was through out-migration, but during and after the Great Recession growth in nonparticipation in the labor market became the primary source of adjustment.11 The combination of these forces has led to large and now persistent differences in rates of employment and nonemployment across regions.
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From page 150... ...
Mismatch When there is reallocation of labor demand, either across geographic areas or by skills required by employers, the possibility of "mismatch" arises. Such a mismatch can be between the skills people have and the ones employers want, or between the areas where labor demand is strong and those where workers tend to reside.13 The mismatch that results is referred to as "structural unemployment," as opposed to the purely cyclical form of unemployment that stems from fluctuations in labor demand and labor supply (depending on one's perspective on macroeconomic models)
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From page 151... ...
Department of Labor also has a Senior Community Service Employment Program (SCSEP) , which is described as "a community service and work-based job training program for older Americans."16 This program is authorized by the Older Americans Act and provides training for low-income, unemployed seniors ages 55 and over.
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. Compared to younger displaced workers, older workers who experience a job loss take longer to find a new job, experience larger declines in earnings, and are more likely to exit the labor force (Farber, 2015)
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From page 153... ...
Summary Findings We summarize the findings from each subsection of this chapter, as follows. • While a rising share of the population at older ages has typically been viewed as a source of lower employment rates for older workers, the evidence is more nuanced, with some evidence that population aging can increase labor demand for older workers, especially when the older cohort is large relative to the cohort just below it in age.
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From page 154... ...
There is evidence that some kinds of retraining -- like community college education in the United States and firm training subsidies in Germany -- boost earnings and employment, although the social returns may be relatively low if workers are relatively close to retirement. • Adverse economic shocks tend to result in less job loss for older workers but larger and more persistent earnings declines and more exit from the labor force when these job losses occur, which can spur early retirement.
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This category of policies that support the financial security of disabled and retired workers includes other programs, notably retirement savings policies. In addition, several policies in this category are designed to boost retirement security among low-income individuals specifically.
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• Family and medical leave • (End of) Mandatory retirement • Worker's compensation • Gradual retirement policies • Senior Community Employment Program Policies to support financial • Disability Insurance security • Social Security • Supplemental Security Income (SSI)
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find that people with disabilities were much more sensitive to government transfer program rules than they were to the ADA, which suggests that proposals targeting such transfer programs may provide maximal impact on the labor force participation of older disabled people.
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However, most of the research to date on family leave policies does not elucidate whether the FMLA or other paid-leave policies affect the employment rates of older workers. Workers' Compensation An unfortunate but, to some extent, inevitable consequence of work is the occurrence of workplace injuries.
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From page 159... ...
The most recent evidence for the United States (Savych and Ruser, 2019) , from a database of workers' compensation claims covering a large share of the United States, indicates that injury rates and the rates of injuries with lost work time are not very different for older workers (and are highest for younger workers)
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, who study a sample of workers with workplace injuries that entailed lost work time, comparing those ages 55 and over to those younger than 55, matching on gender, injury code, and injury date. Older workers report more severe injuries, and (not surprisingly)
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From page 161... ...
, firing, promotion, layoff compensation, benefits, job assignments, and training. In addition, most states have their own age discrimination laws, which may differ from the federal law, for example by allowing for larger damages or applying to workers at smaller firms.
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The abolition of mandatory retirement under the ADEA has increased labor force participation rates among older workers. Von Wachter (2002)
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used variations across states in older workers' responses to the changes in Social Security that were phased in between 2003 and 2008 for cohorts born after 1938 -- a reduction in benefits for those retiring early at age 62 and a gradual increase in the age of full retirement from 65 to 66 -- to estimate the impact of age discrimination laws. They found that in states that had stronger age discrimination laws (those that allowed for larger damages and/or extended coverage to small firms exempt from federal age discrimination law)
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From page 164... ...
One rationale for such a policy is that evidence suggests that age discrimination in hiring is a particularly serious problem, and reducing discrimination is an important way to help society adapt to population aging. One might also argue that age discrimination protections should be on par with protections based on race, sex, ethnicity, and religion.
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From page 165... ...
The elimination of mandatory retirement at age 65 is estimated to have increased the labor force participation of workers ages 65 to 69 by five to 20 percent relative to then current levels (Morrison, 1988; von Wachter, 2002)
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Partial retirement policies exist in many European countries. An international comparison of nine OECD countries that have introduced such policies suggests that the policies increase labor force participation (extensive margin)
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SCSEP participants face many barriers to work, including but not limited to health, social, and economic shocks; age discrimination; caregiving; homelessness or being atrisk of homelessness; limited education; limited English proficiency; chronic health conditions; and/or physically demanding lifetime jobs that are a mismatch with their health (Carolan et al., 2020; Gonzales et al., 2019)
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From page 168... ...
Population aging is one such factor, since SSDI rates rise with age and the Baby Boom generation has recently aged into the peak ages for SSDI receipt. The rising participation of women in the labor force has increased the fraction of women who are insured for SSDI.
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From page 169... ...
One factor that could contribute to age and educational differences in SSDI receipt is the medical-vocational grid, which is used in the final step of the SSDI review.20 The 18 Some indirect evidence on the role of medical screening comes from international comparisons (Wise, 2012)
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The long-term rise in the SSDI rolls has generated interest in existing or prospective policies that might increase labor force participation and reduce SSDI receipt among disabled individuals who retain some work capacity. One such policy is state vocational rehabilitation programs, which provide employment-related services to individuals with disabling conditions.
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From page 171... ...
Interventions designed to support employment and reduce SSDI use among disabled individuals have a mixed record of success, although there is some evidence that providing access to vocational rehabilitation services and employer-provided short-term disability benefits may support work. Social Security Established by the Social Security Act of 1935, the Social Security program provides benefits to retired workers and their dependents and survivors.
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From page 172... ...
A recent estimate put Social Security wealth (as measured at ages 51 to 56) for individuals born between 1960 and 1964 at about $200,000 for White people in the middle of the Social Security wealth distribution and at about $150,000 for Black people and Hispanic people (Hou and Sanzenbacher, 2020)
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From page 173... ...
The project was launched in the late 1990s, motivated by a long-term decline in men's labor force participation as well as large cross-country dif ferences in work at older ages. For each project phase, research teams use a harmonized approach to con duct country-specific studies, whose results are combined to draw meaningful cross-country comparisons.
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From page 174... ...
These changes have generally not affected the incentive to work before age 65, nor to work after age 70, yet the labor force participation rate has risen in all of these age groups. Future research may provide a more complete accounting of the share of increased labor force participation at older ages that can be attributed to changes in Social Security vs.
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