Organizational effects on early withdrawal from the labor force: evidence from the Current Population Survey.

This study examines the reasons for the declining US labor force participation rates among men aged 55-62 years. Data were obtained from the Current Population Survey March Demographic files and periodic job dislocation supplements. This data set is used because of its large sample size and wide age range. It is posited that policies and programs of employers encourage early departure from the labor force and this study examines the extent to which this occurs. This study examines the impact on early retirement of public sector pensions that are tied to length of service rather than age and to job loss due to plant closings or organizational restructuring. By the age of 60 years only 65% of men are employed. Between mid-1960 and mid-1980 male labor force participation rates among men aged 60-64 years declined from almost 80% to about 55%. Withdrawals or dislocations from the labor force varied by age educational level occupation race and industry. A basic work life table for US males in a closed population was constructed based on procedures established by Schoen and Woodrow (1980) and Schoen (1988). The probabilities of four work force transitions at each single year of age are calculated: employed to employed unemployed to employed employed to unemployed and unemployed to unemployed. Tentative findings indicate that employment dislocation and the receipt of public pensions had a significant impact on the employment of older men. Employment of men aged 50 years would be 6% higher (54000 more employed men) after eliminating the effects of dislocation and the resulting employment search. Employment would rise throughout the 50s and reach 8.8% at age 60 years. Eliminating the retirement differences between men with and without public pensions would have more modest effects. The number of 60 year olds employed would increase an additional 2.3% or 14000 men.