Do Older Workers Face Greater Risk of Displacement?

Alicia Munnell, Steven Sass (), Mauricio Soto () and Natalia Zhivan ()
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Steven Sass: Center for Retirement Research, Boston College
Authors registered in the RePEc Author Service: Steven A. Sass () and Steven A. Sass ()

Issues in Brief from Center for Retirement Research

Abstract: The employment of older workers into their mid-60s will be critical to ensuring that they enjoy a secure retirement. Continued employment provides current income while working, avoids the actuarial reduction in Social Security benefits, allows 401(k) accumulations to increase, and shortens the period of retirement those assets must support. One of the risks threatening the ability to work to older ages is being “displaced,” with displacement defined as the elimination of the worker’s job due to a shift in the demand for labor. Displacement can easily throw 50-year-old workers off course, disrupt their retirement saving plans, and possibly lead to premature retirement. This brief explores the displacement of older workers over the period 1984-2004 using the biennial Displaced Worker Supplement to the Current Population Survey. The first section summarizes why continued employment is important. The second section introduces key factors that could affect displacement trends. The third section describes the Displaced Worker Survey and reports the raw data. The fourth section reports regression results aimed at isolating the impact of age, tenure, and other variables on the probability of being displaced. The fifth section reports the results from a similar analysis using the Health and Retirement Study. The bottom line is good news and bad news. The good news is that the data from the Displaced Worker Surveys show that older workers have a lower risk of displacement than younger workers, with no trend toward increasing displacement or worsening outcomes. The bad news is that the lower probability of displacement for older workers is based on the correlation between job tenure and age. Controlling for tenure, age does not protect workers from being displaced. And tenure appears to be declining, which may suggest a greater risk of displacement in the future.

Keywords: older workers; displacement; secure retirement; actuarial reductions; social security benefits; working longer; at older ages; displacement trends; tenure; protection (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-lab
Date: 2006-09, Revised 2006-09
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