Do Elderly Workers Substitute for Younger Workers in the United States?
Do Elderly Workers Substitute for Younger Workers in the United States?
The Social Security program has been the single biggest social insurance program in the United States for decades. This chapter opens up by documenting time series trends in labor supply by age group and then turns to a more formal regression analysis of those trends. It develops a measure of the variation over time in the incentives for retirement of the elderly and relates that to the labor supply of both the elderly and younger workers. The analysis of the labor market impacts of changing elderly labor force participation uses data from the nation's largest annual labor market survey, the Current Population Survey (CPS). The movements in elderly employment are negatively related to prime-aged employment. The positive relationship between the incentive index and unemployment—and the negative relationship of the index with employment—indicates that the incentive index is somewhat predictive of the labor market behavior of the elderly.
Keywords: social security, unemployment, labor market, incentive index, survey
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