Funds from this grant support work by Gary Burtless to measure how employers’ benefit costs vary with age of employees. Burtless will use data from nationally representative microcensus files to obtain reliable estimates of the costs facing employers who hire or retain older workers rather than equally qualified younger workers who are paid the same wage. Cost differences to be examined include health insurance coverage for workers at different ages; compensation for scheduled and unscheduled leave, in particular for sickness; costs associated with the possibility that an older worker’s career will end sooner than that of an equally qualified younger worker; and retirement benefit costs, particularly under defined-benefit plans. Once calculated, these costs will be evaluated against a series of alternate policies that could reduce differences between older and younger workers.

This grant supports a third year of the Age Smart Employer Awards, an annual awards program that honors innovative New York City employers who have adopted effective strategies to recruit, engage, and retain older workers. Emerging research shows that older workers offer distinct advantages to employers. As a group, they are viewed by managers and human resource professionals as motivated, reliable, loyal, and superior in interpersonal communication skills compared to younger workers. Additional research suggests that workforces that are heterogeneous in terms of age are more creative than homogeneous ones. Additionally, because older workers mirror aging consumers, they relate to customers in a growing “silver economy.”  Yet, these advantages are often discounted or offset by employers’ concerns about the costs of employing older workers. The Age Smart Employer Awards aim to combat these concerns by honoring those employers who are successfully facilitating age-diverse workforces. Grant funds will support the administration of a third year of the awards; outreach and publicity efforts; the development of a new tool to help employers understand, identify, and articulate Age Smart practices and policies; expansion of the awards to three new localities; and efforts to expand the Awards’ institutional partners.

Though public sector workers make up 15 percent of the U.S. workforce, little is known about how public sector workers make retirement-related choices and transition from full-time employment to full retirement. Funds from this grant support research by North Carolina State University (NCSU) economist Robert Clark to address this knowledge gap. Using original panel survey data and extensive administrative data from the North Carolina Retirement System, Clark and his research team will examine several important issues, including how older public workers in North Carolina plan for work-to-retirement transitions; how they execute plans to leave career jobs; how they move into new types of employment; and how they ensure income security in complete retirement. In addition to producing research addressing these issues, the grant will also result in a longitudinal panel dataset that, upon application, will be available to scholars interested in the public sector workforce.

This grant supports the research of Peter Berg at Michigan State University, who is examining how changes in pensionable ages implemented through public pension reform in Germany affected the managerial strategies businesses adopted in response to longer work lives. The work is the first microeconomic examination of the effects of increases in social security age on establishments’ internal labor markets. Berg and his team will use linked employer-employee data (LIAB) provided by the Research Data Center (FDZ) at the Institute for Employment Research (IAB) in Germany. This LIAB will then be combined with administrative establishment data from the Establishment History Panel (BHP) to construct the projected policy impact variable. These unique data will allow Berg to examine of how changes in pensionable age differentially affect business establishments; how they affect hiring, promotion, and compensation decisions; and whether they are linked to store or factory closure. The team will also catalogue and assess the diversity of establishment responses to increases in the pensionable age.

Funds from this grant support a project by economist Andrew Caplin to understand the interaction between policies that stimulate greater retirement savings and those that encourage working later in life. Using a rich administrative dataset on Danish workers, Caplin will use structural estimation methods and model-driven survey questions to develop a model that will simulate workers’ responses to a variety of public policy changes. The model will predict how households, faced with wage, health, and mortality shocks, respond by changing their decision on how much to save, what medical goods and services to purchase, and whether and when to retire or to work full or part time. Caplin’s research, focused as it is on how decisions to save and decisions to work are jointly affected by changes in the circumstances facing households, represents an unusually useful addition to the economics literature on working longer, since little is known about the interaction between savings, consumption, and decisions to enter or exit the work force. Caplin anticipates the work will result in three published papers and a workshop. The survey data he collects and the model he develops will also be made openly available for use by other researchers.

This grant funds a study by Lawrence Kotlikoff of Boston University and Alan Auerbach of the University of California, Berkeley that will measure the work disincentives facing older Americans arising from our country’s almost 40 major fiscal programs and provisions. Kotlikoff and Auerbach will study the combined effects of all these programs to understand the marginal tax rate on income earned by older workers at different ages and to assess their combined potential to limit the work and incomes of the elderly. Using detailed data from several public datasets and advanced financial analysis software, the research team will test several hypotheses, including whether there are high median net marginal tax rates on the labor supply of the elderly at all levels of remaining lifetime resources; whether there exists a large dispersion in net marginal tax rates even holding remaining resources fixed, whether there are significant increases in sustainable living standards associated with the elderly working longer, and whether major impacts of the fiscal system on the elderly’s labor supply can be reduced with revenue-neutral fiscal reforms that preserve fiscal progressivity.

Studies show that cognitive abilities tend to decline postretirement, and that continuation of work or work-like activity can slow cognitive decline. What is less well understood, however, is exactly which activities are most conducive to maintaining cognitive productivity. This grant funds efforts by Ursula Staudinger, director of the Columbia University Center on Aging, to understand whether and to what degree activities that involve novel information processing play a role in arresting cognitive decline.   Combining aspects of three well-respected longitudinal studies, the Health and Retirement Study, the Midlife in America Study, and the Wisconsin Longitudinal Study, Staudinger and her team will catalog the work and leisure activities of respondents and characterize the ways in which these activities involve the processing of new information. Comparing these activities with health data on cognitive decline will then permit an estimation of the role novel processing plays in sustaining mental productivity. The resulting research promises to provide important new evidence that will help us better understand how to optimize cognitive aging and identify the individuals or groups whose activity patterns place them at particular risk for cognitive decline.