Search Results
Journal Article
Asset Returns and Labor Force Participation During COVID-19
Why did so many people retire during the pandemic?
Discussion Paper
What Has Driven the Labor Force Participation Gap since February 2020?
The U.S. labor force participation rate (LFPR) currently stands at 62.5 percent, 0.8 percentage point below its level in February 2020. This “participation gap” translates into 2.1 million workers out of the labor force. In this post, we evaluate three potential drivers of the gap: First, population aging from the baby boomers reaching retirement age puts downward pressure on participation. Second, the share of individuals of retirement age that are actually retired has risen since the onset of the COVID-19 pandemic. Finally, long COVID and disability more generally may induce more people ...
Journal Article
Why Are Workers Staying Out of the U.S. Labor Force?
Shifts in retirement and people taking care of family or the home appear to be behind the drop in labor market participation.
Working Paper
Health, Health Insurance, and Retirement: A Survey
The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment ...
Journal Article
Wealth Effects with Endogenous Retirement
In this article, we study wealth effects, i.e., the response of consumption to exogenous changes in wealth. We use a consumption-saving model with endogenous retirement to show that the endogenous response of the value of a worker's human capital to changes in her wealth helps to account for the weak wealth effects observed in the data.
Journal Article
To Retire or Keep Working after a Pandemic?
Workers age 55 and older left the labor force in large numbers following the onset of the COVID-19 pandemic. Four years later, participation within this age group has yet to return to pre-pandemic levels, despite the strongest labor market in decades. This has resulted in an estimated shortfall of nearly 2 million workers. Analysis shows that the participation shortfall is concentrated among workers in this age group without a college degree and can be explained by increased and growing retirement rates for this group, above pre-pandemic trends.
Report
Information Spillovers Within Couples: Evidence from a Sequential Survey of Spouses
Little is known about the extent and drivers of information flow within couples and whether spouses hold aligned expectations about the same outcomes. To provide new evidence, we conduct an online survey of 2,200 middle-aged married couples in the U.S. Our focus is on expectations about Social Security benefits. We first document misalignment in expectations: the correlation between partners’ beliefs about a given spouse’s Social Security benefits is 0.70, well below full agreement. We also show that this imperfect alignment is systematically associated with couple-specific ...
Journal Article
Features: Rethinking Retirement Savings
How much is enough to live comfortably in retirement? Would $30,000 a year be enough? Maybe if you live in a low-cost area, and the house is paid off. How about $15,000? It would be a stretch, at best. Yet recent census numbers indicate millions of Americans over the age of 65 must figure out how to make ends meet on these incomes. A quarter of seniors, almost 14 million retirees, live on only $15,000, while a little over half, 29 million retirees, live on only $30,000 a year. For these Americans, the prospects of a comfortable retirement appear uncertain.
Working Paper
The Evolution of Retirement Wealth
Is the current mix of tax preferences for employer-sponsored pensions and individual retirement saving in the U.S. delivering the best possible retirement-preparedness across and within generations? Using data from the triennial Survey of Consumer Finances for 1989 through 2013, cohort-based analysis of life-cycle trajectories shows that (1) overall retirement plan participation was relatively stable or even rising through 2007, though participation fell noticeably in the wake of the Great Recession and has remained lower, (2) participation is strongly correlated with income, and the shift in ...
Journal Article
Pandemic Labor Force Participation and Net Worth Fluctuations
The US labor force participation rate (LFPR) experienced a record drop during the early pandemic. While it has since recovered to 62.2 percent as of December 2022, it was still 1.41 percentage points below its pre-pandemic peak. This gap is explained mostly by a permanent decline in the LFPR for workers older than 55. This article argues that wealth effects driven by the historically high returns in major asset classes such as stocks and housing may have influenced these trends. Combining an estimated model of wealth effects on labor supply with micro data on balance sheet composition, we ...