Local Labor Market Conditions and Retirement Behavior

Boston College Center for Retirement Research Working Paper No. 2005-08

38 Pages Posted: 13 Sep 2005

See all articles by Dan Black

Dan Black

University of Chicago - Harris School of Public Policy

Xiaoli Liang

Syracuse University - Maxwell School of Citizenship and Public Affairs

Date Written: May 2005

Abstract

In this paper, we explore the effect of local labor market conditions on the labor supply decisions of older workers. We use three different sources of variation: shocks to the US steel industry, shocks to Appalachian coal mining, and shocks to US manufacturing. While each experiment uses different methodology, the three tell a remarkably consistent story: the retirement decisions of Americans over the last thirty-five years have been affected by the performance of local labor markets. First, using variation induced by the decline in the US steel industry, we find that a 10 percent reduction in earnings resulting from the decline of the primary metals industry resulted in a 1.5 percent increase in the participation and expenditures of the Old Age program. Second, using variation in coal prices induced by oil shocks, we find that a 10 percent increase in earnings from the coal industry reduced participation about 0.9 percent and decreases expenditures about 1.2 percent. Finally, looking at variation induced by the concentration of manufacturing employment, we use micro data to examine the age and education levels of those who retired.

Keywords: Labor market, retirement

JEL Classification: J14, J26, J45

Suggested Citation

Black, Dan and Liang, Xiaoli, Local Labor Market Conditions and Retirement Behavior (May 2005). Boston College Center for Retirement Research Working Paper No. 2005-08. Available at SSRN: https://ssrn.com/abstract=797104 or http://dx.doi.org/10.2139/ssrn.797104

Dan Black (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Xiaoli Liang

Syracuse University - Maxwell School of Citizenship and Public Affairs ( email )

400 Eggers Hall
Syracuse, NY 13244
United States

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