The Effect of Economic Conditions on the Employment of Workers Nearing Retirement Age

42 Pages Posted: 4 Nov 2008

See all articles by Till von Wachter

Till von Wachter

Columbia Business School - Economics Department; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2007

Abstract

The decline in employment of men near retirement age was concentrated between the early 1970s and 1980s, a period of dramatic shifts in the United States labor market. The paper begins to explore the effect of these shifts on retirement behavior. To do so, it analyzes the effect of changes in economic conditions at the individual, industry, and state level on employment of workers near retirement. Declines in labor demand reduce employment of older workers if their wages are rigid, possibly because of high replacement rates, habits, or implicit contracts. The paper gives a preliminary assessment of this potential mechanism by analyzing the response of relative employment of older and younger more and less educated workers to economic shocks. Preliminary results suggest that economic conditions are likely to have important effects on the employment of men near retirement age. However, the current evidence does not strongly suggest an explanation based on rigid wages or secular declines of economic conditions of low-skilled workers. An exception to this pattern is the manufacturing sector.

Suggested Citation

von Wachter, Till, The Effect of Economic Conditions on the Employment of Workers Nearing Retirement Age (December 2007). Available at SSRN: https://ssrn.com/abstract=1294717 or http://dx.doi.org/10.2139/ssrn.1294717

Till Von Wachter (Contact Author)

Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
83
Abstract Views
893
rank
296,680
PlumX Metrics