Public sector and private sector employees experience what appear to be distinctly different routes from full-time employment to full-time retirement. This grant funds research by North Carolina State University’s Robert Clark and Harvard’s Joseph Newhouse that will compare the retirement paths of public and private workers and assess how working conditions, retirement benefits, and government regulations impact the age of retirement and the likelihood of working after retirement. Clark and Newhouse will commission 16 research studies that will examine the impact of pensions, health policies, employment rules, and government programs and regulations on the timing of when older workers leave their jobs, their potential for working after retirement, and how these differ for public and private sector employees. The research will be carried out in two waves, with eight projects and a capstone research conference for each wave.?

Many economists predict that the global economy is entering a sustained period of historically low productivity and real wage growth. This grant funds work by economists John Shoven and Sita Slavov that will analyze the implications of working longer and strategies for saving for retirement in a such a low-growth, low-return, low real-wage-growth environment. How do optimal retirement and savings strategies change as the prospects of robust economic growth dim? This research will include two projects related to the broader theme of retirement-focused behaviors in a slow growth economy. The first will focus on the measuring the benefits accruing to working longer in a low-return environment. Using data taken from the influential Health and Retirement Study (HRS), Shoven and Slavov they will compute the rate of return to working longer for HRS respondents between ages 50 and 62 using a life cycle model that assumes individuals face borrowing constraints and that incorporates the actuarial benefit adjustments they receive when they delay Social Security The second project will explore in depth the impact of low wage growth and low asset returns in a slow growth economy. Shoven and Slavov will work through the theoretical implications of optimal savings and working decisions. Because savings depresses current standards of living in exchange for future benefits, the attractiveness of saving drops as asset returns slow. Likewise, the attractiveness of future work dips as wage growth slows. Shoven and Slavov will work out how these differing factors interact under standard economic modeling assumptions, paying special attention to the implications for working longer to raise or maintain living standards. The two projects form interesting and compelling research agenda that has real-life consequences for millions of Americans.

The annual Stanford Institute Economic Research (SIEPR) Working Longer Conferences allow researchers working at the intersection of aging and work to present their findings, compare approaches, imagine new projects, and get constructive feedback from fellow researchers. Over the past four years, more than 90 different scholars have presented high-quality research as authors, co-authors, or discussants, and each conference has averaged 60 to 70 attendees. The conferences also provide the opportunity for Sloan to identify new potential grantees and to introduce and welcome junior scholars to the community of working longer researchers. This grant provides funds to Stanford University to continue organizing, administering, and hosting the SIEPR Working Longer conferences for an additional three years.

The ability to accurately predict the U.S. labor force participation rate among older workers is important, not least because it bears significantly on the finances of the Social Security system. Traditional methods for predicting this crucial statistic involve extrapolating from past trends. Past trends, however, may not continue. Over the past 25 years, for instance, the labor force participation rate of the population aged 60 to 69 has been increasing, in part because Americans in their 60s were getting progressively healthier. But recent studies suggest this is no longer the case. What effects, if any, will the halting of this trend toward better health in older Americans have on labor force participation rates? This grant funds the work of researchers Susann Rohwedder and Michael Hurd, who are examining this issue. Using twelve waves of data from the Health and Retirement Study (HRS), Rohwedder and Hurd will study how labor force participation at older ages has increased even as some determinants of participation have worsened and examine whether the trend toward working at older ages is likely to continue, especially in view of adverse trends in health. One particular focus of their work will be the relationship between labor force participation rates and individuals’ forecasts about how long they will continue to work as they age, examining how predictive these forecasts have been in the past and how their predictive power varies along multiple dimensions. Once this relationship is better understood, the hope is to use this knowledge to inform forecasts of labor force participation rates going forward.

This grant supports the planning of a project led by Richard Johnson and Eugene Steuerle of the Urban Institute to identify, simulate, and evaluate policy reforms that, taken alone, as well as simultaneously, would reduce work disincentives at older ages and more equitably and efficiently provide retirement benefits to older adults. In so doing, this larger project would provide important new information about the likely costs and benefits of reforming Social Security, Medicare, employer-sponsored retirement plans, and tax incentives for retirement saving. The larger project will use DYNASIM, the Urban Institute’s dynamic microsimulation model, to simulate the likely impact of potential retirement program reforms across a vast array of dimensions, including effects on employment at older ages; on older adults’ household wealth; on annual income; on lifetime Social Security benefits; on income tax payments; and on out-of-pocket spending on medical care. The team will also model the effects of hypothetical reforms on government revenues and outlays. The planning activities funded by this grant will lay the groundwork for the larger project by implementing necessary enhancements to DYNASIM, specifying criteria for evaluating policy reforms, and making the case for the need to reform retirement programs to eliminate work disincentives.