Bulls, Bears and Retirement Behavior

TitleBulls, Bears and Retirement Behavior
Publication TypeReport
Year of Publication2004
AuthorsCoile, C, Levine, PB
Series TitleNBER Working Paper
Document Number10779
InstitutionThe National Bureau of Economic Research
CityCambridge, MA
KeywordsNet Worth and Assets, Retirement Planning and Satisfaction

The historic boom and bust in the stock market over the past decade had the potential to significantly alter the retirement behavior of older workers. Previous research examining the impact of wealth shocks on labor supply supports the plausibility of this hypothesis. In this paper, we examine the relationship between stock market performance and retirement behavior using the Health and Retirement Study (HRS), Current Population Survey (CPS), and Survey of Consumer Finances (SCF). We first present a descriptive analysis of the wealth holdings of older households and simulate the labor supply response among stockholders necessary to generate observed patterns in retirement. We show that few households have substantial stock holdings and that they would have to be extremely responsive to market fluctuations to explain observed labor force patterns. We then exploit the unique pattern of boom and bust along with variation in stock exposure to generate a double quasi-experiment, comparing the retirement and labor force re-entry patterns over time of those more and less exposed to the market. Any difference in behavior that emerged during the boom should have reversed itself during the bust. We find no evidence that changes in the stock market drive aggregate trends in labor supply.

Endnote Keywords

Retirement Behavior/Stock Market

Endnote ID


Citation Key5597