Discouraged Workers? Job Search Outcomes of Older Workers

48 Pages Posted: 21 Feb 2008  

Nicole Maestas

Harvard Medical School - Department of Health Care Policy

Xiaoyan Li

RAND Corporation

Date Written: October 2006

Abstract

Many have suggested we 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? In the context of a theoretical job search model, we examine the decision to search for a job and the probability of transitioning to employment using a large sample of non-workers from the Health and Retirement Study. The effects of both supply-side factors (individual characteristics) and demand-side factors (local labor market conditions) are estimated with a set of reduced form econometric models. We find employment transition rates are relatively low for older searchers: only half of older searchers successfully attain jobs. We examine various explanations for this result, including variation in search intensity, reservation wages, and the possibility of intervening health shocks. We conclude that about 13% of older job searchers becomes a discouraged worker in the sense of being willing to work at the prevailing wage, but unable to find a job.

Suggested Citation

Maestas, Nicole and Li, Xiaoyan, Discouraged Workers? Job Search Outcomes of Older Workers (October 2006). Michigan Retirement Research Center Research Paper No. WP 2006-133. Available at SSRN: https://ssrn.com/abstract=1095278 or http://dx.doi.org/10.2139/ssrn.1095278

Nicole Maestas (Contact Author)

Harvard Medical School - Department of Health Care Policy

180 Longwood Avenue
Boston, MA 02115
United States

Xiaoyan Li

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

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