How do recessions in general, and the Great Recession in particular, impact older workers? Are older workers more or less likely to be laid off in recessions? If they are laid off, how long are they out of the labor force and are they eventually able to find new jobs? If they find new jobs, are they at the same or substantially lower pay? To what extent are unemployed older Americans effectively forced into early retirement? These are important questions that have real economic consequences for a significant portion of the labor market. This grant to Dartmouth College supports a project by Alan Gustman, Tom Steinmeier, and Nahid Tabatabai, to specify and estimate a structural retirement model to answer questions about how recessions, including the Great Recession of 2007-2009, affect the labor market activities and retirement of the older population, aged 50 and above.
Working with data from the highly-regarded, longitudinal Health and Retirement Study, Gustman and his team will analyze the direct effects of recessions on work responses to layoffs and reduced market activities, as well as indirect effects from wealth losses and induced changes in health and disability status. Factors to be included in their analysis include changes in wealth, incentives from pensions and Social Security, spousal behavior, and the influence of key regulatory policies, including unemployment insurance, disability insurance, and the early claiming of Social Security benefits.