Early Retirement Windows Year 2

Published: 2002
Project ID: UM02-07


An analysis of those who accepted window offers shows a sharp decline in employment and hours worked, earnings per hour, and annual earnings immediately following the accepted offer. Transitions to self-employment are more common among window acceptors than other workers. In subsequent waves, employment and hours worked decline slowly. Employment and hours are falling significantly for other workers, and in a sense they “catch up” to the window acceptors on these dimensions. Evidence on changes in hourly earnings following the initial downward adjustment is mixed – those who accepted window offers prior to Wave 1 seem to experience slightly faster wage and earnings growth than other workers, but the experience of those who accepted offers since Wave 1 shows little pattern. The reduced hours, lower wages, and increased incidence of self-employment of those who continue working after accepting early-retirement window offers are consistent with the literature on partial retirement or “bridge” jobs. An important difference, however, is that bridge jobs are often seen as relatively short-term transitions to full retirement, while employment probabilities of those who accept early-retirement windows decline relatively slowly. One might expect those accepting window offers to experience slower wage growth prior to the offer than other workers, much as workers experiencing job displacement do. However, there is not much evidence of this in the HRS data.



Charles Brown