Working Paper: NBER ID: w28914
Authors: Richard Rogerson; Johanna Wallenius
Abstract: Employment rates of males aged 55-64 have changed dramatically in the OECD over the last 5 decades. The average employment rate decreased by more than 15 percentage points between the mid-1970s and the mid-1990s, only to increase by roughly the same amount subsequently. One proposed explanation in the literature is that spousal non-working times are complements and that older males are working longer as a result of secular increases in labor supply of older females. In the first part of this paper we present evidence against this explanation. We then offer a new narrative to understand the employment rate changes for older individuals. We argue that the dramatic U-shaped pattern for older male employment rates should be understood as reflecting a mean reverting low frequency shock to labor market opportunities for all workers in combination with temporary country specific policy responses that incentivized older individuals to withdraw from market work.
Keywords: employment; older individuals; labor market shocks; policy responses
JEL Codes: E24; J21; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| common shock (H12) | labor market opportunities (J49) |
| labor market opportunities (J49) | older individuals (J14) |
| common shock (H12) | employment rates (J68) |
| employment rates (J68) | older males (J14) |
| country-specific policy responses (F68) | labor market opportunities (J49) |
| labor market shocks (J49) | employment trends (J68) |
| employment trends (J68) | older males (J14) |
| employment trends (J68) | older females (J14) |