A Micro-Level Analysis of Recent Increases in Labor Force Participation among Older Workers
Aggregate data reveal a sizable increase in labor force participation rates since 2000 among American workers on the cusp of retirement, reverting back to levels for older men not seen since the 1970s. While these aggregate numbers are useful in that they document overall trends, they do not elucidate the reasons behind workers’ decisions. The Health and Retirement Study (HRS), a nationally-representative, longitudinal survey of older Americans that spans 1992 to 2004, provides micro-level data regarding these retirement trends. This study capitalizes on the richness of the HRS data and explores labor force determinants and outcomes of older Americans, with an emphasis on retirees’ choices in recent years. We present a cross-sectional and longitudinal description of the financial, health, and employment situation of older Americans. We then explore retirement determinants using multinomial logistic regression to model gradual retirement and logistic and OLS regression to model the work-leisure (whether to work) and hours intensity (how much to work) decisions of older workers. Evidence suggests that the majority of older Americans retire gradually, in stages, and that younger retirees continue to respond to financial incentives just as their predecessors did. In addition, the retirement decisions of younger and middle-aged retirees appear similar in the face of macro-level changes in the early part of this decade.