How Do Local Labor Markets Affect Retirement?
Michael Owyang (),
Wei Sun and
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Leora Friedberg: University of Virginia
Wei Sun: Renmin University of China
Anthony Webb: New School’s Schwartz Center for Economic Policy Analysis
Review, 2017, vol. 99, issue 3, 259-78
Compared with prime-age workers, older workers face an easier path out of the labor force if they lose their jobs during a recession. However, premature job exits or earnings losses in the years leading up to retirement may be particularly devastating to retirement savings. The authors analyze the impact of recent business cycles on retirement using multifaceted job transitions of older workers. They focus on local labor markets because older workers are particularly unlikely to move for work. Surprisingly, the biggest effect of a higher local unemployment rate on older workers is to raise the propensity to stay in one’s current job. Older workers have fewer voluntary transitions to new jobs when the unemployment rate rises, but they especially have fewer voluntary transitions out of the labor force. Thus, the direct effect of job loss in inducing earlier retirement during recessions is outweighed by retirement delays among those with jobs.
JEL-codes: J23 J26 J62 (search for similar items in EconPapers)
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