Occupations and Work at Older Ages: Varied Responses to Policy

There are a number of differences between individuals in “blue-collar” and “white-collar”
occupations in the timing of retirement, savings, Social Security OASI claiming ages, and
SSDI applications. This paper presents descriptive evidence of these differences and develops and estimates the parameters of a model of later-life labor supply, savings, and Social
Security OASDI behavior. The model accounts for a number of differences across blue- and
white-collar workers in particular and is then used to predict behavior and measure welfare under the counterfactual policy scenarios of increases in the Early Retirement and Full
Retirement Ages for claiming Social Security benefits. I find that increasing the Early Retirement Age has large labor supply and disutility effects for blue-collar workers, and results
in greater SSDI application for this group. This is driven primarily by those in blue-collar
occupations experiencing more steeply declining productivity with age and less margin on
which to respond to policy changes. Increasing the Full Retirement Age affects the labor
supply of white-collar but not blue-collar workers. It does, however, increase the savings
somewhat for the latter group.