POPULATION AGING RESEARCH CENTER Crime and Early Retirement Among Older Americans

This paper investigates the relationship between local crime rates and the retirement decisions of older Americans. We do so by linking data from the Health and Retirement Study with measures of local crime patterns taken from the Federal Bureau of Investigation’s Unified Crime Reports. If we condition on crime rates alone, there is either a weakly positive or no relationship between local crime patterns and older men’s propensity to retire early. But unobservable factors associated with early retirement may be correlated with residence in higher-crime rate cities, so next we condition on both the expectation for the crime rate and deviations from average crime levels. We find a positive and statistically significant association between early retirement and expectations for murder rates, and a positive but, on average, imprecisely estimated positive association between early retirement and unexpected increases in crime. The effect of unanticipated increases in crime is greatest, and significant for those in poor health. In this latter group, men are 14 percent more likely to retire early given a standard deviation increase in unexpected murder rates. These findings are consistent with a pattern of more early retirement among those who live in higher crime areas, and earlier retirement among those in poor health when crime levels rise above anticipated levels. Dan Silverman (corresponding author) Department of Economics, University of Michigan 611 Tappan Street, Ann Arbor, MI 48109. Tel. (734) 327-2813 [email protected] Olivia S. Mitchell Wharton School, University of Pennsylvania 3641 Locust Walk, Philadelphia PA 19104-6218 Tel: (215) 898-0424. [email protected] Crime and Early Retirement Among Older Americans Dan Silverman and Olivia S. Mitchell Little is known about how local amenities and community attributes influence the labor market decisions of older Americans. In this paper, we explore the relationship between a particular aspect of community life – namely, local crime rates – and how these influence older people’s work and retirement decisions. One motivation for our work derives from the potential vulnerability to crime of older people with limited resources and living in disadvantaged communities. Older people tend to be especially fearful being victimized by crime (Brillon, 1987), although evidence suggests that, in fact, they are relatively less likely to be victimized than average. For instance, the rate of criminal victimization for people age 50+ is eight times lower than among young adults age 16-24 (Rennison, 1999). Another motivation for analyzing the relationship between crime and retirement patterns is an interest in how work and retirement decisions could influence the communities in which older people live. While exposure to local crime can alter individuals’ work decisions, their work patterns may also affect crime levels, especially in economically disadvantaged communities. For example, sociological studies of low-income areas suggest that older people who remain engaged in their communities tend to supervise neighborhood youth and act as important role models (Anderson, 1990, 1999). By playing such supervisory roles the “old heads” may, in turn, reduce crime in lowincome neighborhoods. Such evidence suggests that the interactions between crime and older persons’ labor market attachment deserve additional investigation. Our approach draws on prior studies in both economics and sociology. One strand of analysis, in labor economics, finds that factors influencing retirement include social security benefits (Rust and Phelan, 1997), company pensions (Fields and Mitchell, 1984; Stock and Wise,