Employment Trends by Age in the United States: Why Are Older Workers Different?

Published: 2013


Employment trends in the US were similar across age groups in the 1960s, 1970s, and 1980s: male employment rates declined or were flat at all ages and female employment rates increased or were flat at all ages. But employment trends diverged more recently, with employment rising at older ages and falling at younger ages, for both men and women. This paper seeks to explain this divergence. We estimate labor supply models for men and women, allowing differences in behavior across age groups. The results indicate that changes in the educational composition of the population and Social Security reforms can account for a modest proportion of the divergence. An additional factor for men was the increase in age at first marriage. However, much of the divergence remains unexplained.

Key Findings

    • Employment trends diverged by age in the past quarter century, with employment rates declining at younger ages and rising at older ages, for both men and women.
    • Social Security reform, changes in the educational composition of the population by age, and the delay in first marriage can explain 10-20% of the divergence.
    • The effect of Social Security reform on the divergence in employment trends by age will persist and likely increase in magnitude as benefits decline in the future.
    • Future research should study the role of other factors such as age discrimination and job displacement.