Working Papers


Why Are Older Americans Working More Nowadays?

Job Market Paper

Both labor force participation and hours per worker of seniors, individuals above age 62, have been growing steadily in the US since the mid-1980s. This is in contrast to the long decline in the labor supply of seniors that began as early as in the 1950s. This paper uses data from the Health and Retirement Study (HRS) to estimate a life-cycle model of labor supply, retirement, and wealth accumulation in order to contrast the labor supply behavior of two cohorts in the US: individuals born after World War I (“the Great Depression Kids”), and those born after the World War II (“the Baby Boomers”). The paper focuses on the differences between these two cohorts in earning and health dynamics as well as policies that they face, a gradual increase in Normal Retirement Age and the elimination of the Earnings Test in 2000, as potential sources of change. The results show that the effects of policies and policy-unrelated factors are of similar magnitude. The elimination of the Earnings Test had the biggest impact of all policies. Jointly, the rise in out-of-pocket medical expenditures and the increase in life expectancy are the dominant factors among non-policy-related ones.

Keywords: life-cycle models, retirement, labor supply, health, social security

JEL Classification: J14, J22, J26

 

Reservation Wages and the Minimum Wage Reform

with Alexandra Fedorets and Cortnie Shupe

We use the German Socio-Economic Panel to show that an introduction of a high-impact statutory minimum wage causes an increase in reservation wages. This adjustment is especially pronounced for men and German citizen. Migrants exhibit downward adjustment of their reservation wage. This result has can have implications for job search and unemployment duration.

Keywords: minimum wage, reservation wage, labor supply

JEL Classification: J22, J3

 

Work In Progress


 

German Minimum Wage Reform and Unemployment Duration

with Alexandra Fedorets and Cortnie Shupe

We study the effect of the introduction of the federal minimum wage on January 1, 2015, on the duration of unemployment in Germany. We show that the average duration of unemployment has increased, especially for individuals living in the areas with high reform impact, measured as a share of the population with pre-reform wages lower than the introduced minimum.