Extending the working lives of older workers: The impact of Social Security policies and labor market

TitleExtending the working lives of older workers: The impact of Social Security policies and labor market
Publication TypeThesis
Year of Publication2010
AuthorsLi, X
AdvisorMaestas, N
DegreePhD
Number of Pages135
UniversityThe Pardee RAND Graduate School
KeywordsEmployment and Labor Force, Retirement Planning and Satisfaction, Social Security
Abstract

This dissertation addresses several issues related to public policies that encourage the extension of working lives of the elderly in the United States. It consists of three chapters. The first chapter and the second chapter of the dissertation evaluate the impacts of the increase in the Social Security Full Retirement Age (FRA) from age 65 (for those born before 1937) to age 66 (for those born between 1943 and 1954). As the FRA rises, the relative generosity of Social Security disability benefits in comparison to retirement benefits is rising, increasing the incentive for insured people to apply for disability benefits. The first chapter uses the Health and Retirement Study (HRS) to estimate this spillover effect. I find that an average four-month increase in the FRA modestly increases the two-year disability benefits application rate by 0.34 percentage points. The effect is greater (0.77 percentage points) among those with a work-limiting health problem. The increase in the FRA also creates an incentive for older workers to increase their labor supply. Using the Basic Monthly Current Population Survey 1994-2009, the second chapter estimates that the labor force participation rate of men aged 62-65 increased by 3.5-4.5 percentage points in response to a one-year increase in the FRA. The third chapter of the dissertation answers the question, "To what extent can the elderly readily find suitable jobs if they want or need to work?" This chapter shows that the employment transition rates are relatively low for older job searchers in the Health and Retirement Study: only half of older searchers successfully attain jobs. A negative age gradient in job attainment is estimated from a set of reduced-form econometric models, which although not conclusive, corroborates other evidence in the literature of statistical age discrimination in the labor market for older workers.

Endnote Keywords

Retirement age

Endnote ID

23560

Short TitleExtending the working lives of older workers: The impact of Social Security policies and labor market
Citation Key6411