Work or Play?

The aging of the U.S. population, concerns over the long-term solvency of Social Security and Medicare, and recent data have sparked much research on the labor supply of older individuals. The bulk of this research has focused on individuals approaching traditional retirement ages of fifty-five to sixty-four. However, much less research has considered the labor supply of individuals beyond this age, a population referred to here as the “elderly.” Perhaps the most fundamental questions about elderly labor supply address why the elderly work and do not work. For example, to what extent do the elderly work because of financial circumstances, such as negative shocks to wealth or unexpected expenditures related to healthcare? Alternatively, to what extent do the elderly work simply because they enjoy work? In other words, might work be considered leisure— or play—for the elderly who continue to work? For those elderly who do not work, are they choosing not to work? Or is it the case that elderly persons who are not employed are having difficulties finding suitable employment? The apparent reversal of the long-run trend toward earlier retirement and the general aging of the U.S. population make finding answers to such questions increasingly important. The issue has inspired a series of reports arguing that many public and private policies pose serious barriers to work for the elderly, and there should be efforts to eliminate them (Committee for Economic Development 1999; Knapp and Muller 2001; Munnell 2006; Purcell 2003). Concern over this issue has been sufficiently great to warrant hearings in the U.S. Senate calling for action at the federal level to reduce barriers to work among the elderly (Now Hiring 2000). Understanding what motivates the elderly to continue working is an important ingredient in formulating public and private policies to increase elderly labor supply. S_ E_ L_