Latent Work Capacity and Retirement Expectations

We propose to develop a new method to assess individuals’ latent work capacity and relate it to: (1) their current employment status, and (2) their expectations about their probabilities of working at older ages. To do this, we will use a unique data set containing individuals’ self-rating of 52 dimensions of ability included in the Occupational Information Network (O*NET) database of job demands for nearly 1,000 occupations. By comparing an individuals’ ability levels to the minimums required for different jobs, we will construct a one-dimensional summary measure of that person’s latent work capacity, which we hypothesize is predictive of both current and future labor supply decisions.