2014 Working Longer and Retirement Conference
How much does Access to Health Insurance Influence the Timing of Retirement?
Norma Coe and Gopi Shah Goda
Jay Bhattacharya, Stanford University
What is the impact of the Affordable Care Act (Obamacare) on the timing of retirement? In particular how do rating regulations affect timing of retirement? Will the fact that people now can have access to health insurance independent of their employer figure in their retirement decisions. Because different states have different regulatory environments, Coe and Goda can compare the states and tease out the effects of regulations on retirement hazards. The results are preliminary but they suggest that there is little evidence that the regulatory environment influences the timing of retirement. The effects of ACA on retirement behavior may depend more on changes in retiree health insurance and employer-sponsored health insurance.
Changing Mortality Rates, Delays in Retirement, and Income Inequality Amongst the Elderly
Gary Burtless and Barry Bosworth
Sita Slavov, George Mason University
Retirement Transitions for Public Employees
Robert Clark, Robert Hammond, Emma Hanson, and Melinda Morrill
John Pencavel, Stanford University
Good planning is perhaps the first step to having adequate income and consumption in retirement. Yet very little is known about how workers plan for retirement. This paper uses administrative and survey data to explore factors associated with measures of planning among public sector workers in North Carolina. The findings show that about half the workers aged 50 to 69 have made a retirement plan. Impatient workers (those with higher time discounting) are less likely to have planned. Financial literacy (as measured by a knowledge test on inflation) is associated with higher rates of planning. Unsurprisingly, planning is associated with higher rates of wealth accumulation and participation in retirement savings plans. Planners are more likely to retire completely rather than reenter the labor market after retiring from their public sector job. Planners report that they plan to retire at an earlier age.
Modeling and Measuring Labor Market Behavior in Later Life
Andrew Caplin and Chris Tonetti
B. Douglas Bernheim, Stanford University
This work presents a new model of how the elderly balance the wage and complex non-wage aspects of an employment opportunity. The model builds on the idea of "rational inattention" from information theory. (Namely, since information is costly to acquire and process, we can't pay attention to all available information relevant to a decision, so we attend only to information that we find useful and we deliberately ignore information that we find too costly to acquire and process.) This papers provides a framework for how the elderly may go about a post-career job search: It develops “a model of job search with rationally inattentive workers. Job offers consist of both wage and complex non-wage characteristics. When a worker receives an offer of employment, the utility that would result from acceptance is initially uncertain. This uncertainty can be reduced before accepting a job via costly attention, with the amount and type of attention responding rationally to the economic environment. In a life-cycle framework, information acquisition interacts with the finite horizon to affect job search, job acceptance, and job turnover as an individual ages.”
The Impact of Disability Benefits on Labor Supply: Evidence for the VA’s Disability Compensation Program
Mary Daly, San Francisco Federal Reserve Board
The Decline in Labor Force Participation among America's Veterans: The Role of the VA's Disability Compensation Program
This work examines how the US Department of Veteran Affairs' Disability Compensation Program (DC) affects labor force participation rates among veterans. DC provides income and health insurance to four million veterans who have duty-related disabilities. Duggan and colleagues are able to tease out the effects of the program because in 2001 there was a policy change that included type-II diabetes among the covered disabilities. This decision applied only to Vietnam veterans who had been in theater, and may have been exposed to Agent Orange; but it did not extend coverage to Vietnam Veterans who had not been in theater. By comparing covered (in-theatre) to uncovered (not-in-theatre veterans), who are otherwise comparable, allows the authors to estimate the effects of the coverage policy change. They find that the policy increased DC enrollment, which reduced labor force participation by 18 percentage points among the veterans who enrolled. For every 100 new recipients of DC benefits, 18 dropped out of the labor force. Moreover there are spillovers to DC-coverage: veterans receiving DC are more likely to qualify fore Social Security Disability Insurance benefits. Altogether the change in DC coverage policy led to a significant drop in labor force participation among covered veterans and increased SSDI receipt among near-elderly Vietnam veterans.
This work is covered in the SIEPR Policy Brief by Mark Duggan, The Wayne and Jodi Cooperman Professor of Economics and incoming Director of SIEPR.
Forecasting Labor Force Participation of Older Men and Women
Michael D. Hurd and Susann Rohwedde
Enrico Moretti, Berkeley University
The labor force participation of older men increased substantially beginning in the early 1990s. An important question for policy is whether this trend will continue. For example, pressures on the Medicare trust funds will be reduced if more Medicare eligibles work because Medicare is second payer when someone has employer-provided insurance. Hurd and Rohwedder use the subjective probabilities of working past 62 and 65, which are collected in the HRS, to forecast labor force participation for about 15 years in the future. The subjective probabilities are highly predictive of future labor force participation both across persons and also in the aggregate: for example, the subjective probabilities obtained by HRS in the 1990s forecast the higher labor force participation we observe today.
Bob Willis, University of Michigan
Population aging is already playing out to different degrees across communities in the U.S. Maestas uses spatial variation in the pace of population aging across U.S. communities to examine how labor markets are changing in response to changes in the age structure of the population.
Extending Worklife in Japan
Robert Clark and Naohiro Ogawa
Joseph Quinn, Boston College
With one of the world's lowest fertility rates and highest life expectancies, Japan is the most rapidly aging country in the world. Whether Japan continues to grow will depends in part on the ability to keep older workers in the labor force. Yet Japanese employers maintain mandatory retirement at age 60. But Japan has a highly developed retirement transition that moves workers from careers jobs to bridge jobs and self-employment. This transition system has helped keep Japan's labor force participation for over-60 workers as the highest among developed countries. This paper reviewed past studies on the transition in Japan and offered new results from the Japan Survey of Aging and Retirement.