UM06-21: Rising Economic Risk and the Labor Supply of Older Workers
Changes in social insurance systems affect the ways in which individuals self-insure against undesirable economic outcomes. One’s ability to work is an important means of self-insurance, and, as policy changes to Social Security are considered that might directly or indirectly cause retirees to seek work, it is very important for policymakers to understand the labor market for older workers. Indeed, many have suggested that the U.S. adopt policies that explicitly encourage the elderly to work. Behind this suggestion is the assumption that if an older person desires a job, one will be found. However, little is known about the extent to which this is true and, in the Health and Retirement Study, many more respondents say they expect to work after retirement than actually undertake work. This raises an important question: To what extent can the elderly readily find suitable jobs? This project will analyze the labor market for older workers. It will test for evidence of excess supply of older workers, examine how local labor market conditions affect labor force outcomes of retirees, and analyze the effect of retirees’ subjective assessments of their prospects of finding work on the decision to search for work. The project will also examine to what extent an individual’s assessment of his likelihood of finding a job after retirement influences his retirement timing and likelihood of transitioning through partial retirement.