Barriers to Later Retirement: Increases in the Full Retirement Age, Age Discrimination, and the Physical Challenges of Work

Abstract

Policy changes intended to delay retirements of older workers and extend their work lives may run up against demand-side barriers from age discrimination, and supply-side barriers owing to rising physical challenges of work as people age. We study three questions. How do age discrimination protections affect labor market transitions of workers encouraged to work longer by increases in Social Security’s Full Retirement Age (FRA)? How do physical challenges at work influence employment transitions of older workers for whom public policy is trying to delay retirement? And what role do stronger age discrimination protections play in helping workers facing physical challenges at work?

We find that stronger state age discrimination protections increase employment and hiring for older workers caught by increases in the FRA. We also find that physical challenges pose a barrier to extending work lives, although some workers with physically-demanding jobs are able to mitigate these demands -- either at new jobs or with the same employer. However, for the most part stronger age discrimination protections do not appear to contribute to older workers’ ability to mitigate physical challenges at work.

Keywords: age discrimination, Age Discrimination in Employment Act (ADEA), labor supply, retirement age