Bulls, Bears, and Retirement Behavior

Courtney Coile and Phillip Levine

No 10779, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The historic boom and bust in the stock market over the past decade had the potential to significantly alter the retirement behavior of older workers. Previous research examining the impact of wealth shocks on labor supply supports the plausibility of this hypothesis. In this paper, we examine the relationship between stock market performance and retirement behavior using the Health and Retirement Study (HRS), Current Population Survey (CPS), and Survey of Consumer Finances (SCF). We first present a descriptive analysis of the wealth holdings of older households and simulate the labor supply response among stockholders necessary to generate observed patterns in retirement. We show that few households have substantial stock holdings and that they would have to be extremely responsive to market fluctuations to explain observed labor force patterns. We then exploit the unique pattern of boom and bust along with variation in stock exposure to generate a double quasi-experiment, comparing the retirement and labor force re-entry patterns over time of those more and less exposed to the market. Any difference in behavior that emerged during the boom should have reversed itself during the bust. We find no evidence that changes in the stock market drive aggregate trends in labor supply.

JEL-codes: J14 J26 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-bec
Note: AG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Courtney C. Coile & Phillip B. Levine, 2006. "Bulls, bears, and retirement behavior," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(3), pages 408-429, April.

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