Marjorie Honig

Partial Retirement as a Separate Mode of Retirement Behavior

Partial retirement is a quantitatively important retirement state that shows significant structural differences from behavioral functions of either full retirement or full-time work. Alternative models of the choice of retirement state are estimated on a sample of white married males from the Retirement History Survey, 1967-1973. Findings suggest that, while partial retirement appears to take several different forms, the critical choice for a large number of older workers appears to be that of labor force participation first, with either partial or full-time employment determined conditionally among participants. The model has good explanatory power and conforms to expectations of the effects of various relevant variables on labor supply decisions.

Retirement, Wages, and Labor Supply of the Elderly

A model of labor force participation, market wages, and labor supply of annual hours and weeks of work is estimated for married males and unmarried females in a sample from the retirement history survey, 1969-75, matched with social security earnings records. Emphasis is placed on the effects of variables associated with retirement and old age and on the estimation of net age profiles purged of biases associated with specific years and cohorts and with the other included variables. The effects of most of the usual variables appear to be consistent with the theory and with other empirical findings for both sexes. In addition, age itself has a strong net autonomous effect on each of the dependent variables due to biological, societal, or institutional factors.

AFDC Income, Recipient Rates, and Family Dissolution

The AFDC program contains incentives for family dissolution, as well as the usual incentives regarding work effort inherent in transfer programs of its type. The research discussed below attempts to determine the extent of the impact of these incentives. Cross-section analyses of SMSAs in 1960 and 1970 are presented, relating the proportion of female-headed families and the proportion of the female population receiving AFDC assistance to the size of the AFDC payment and related variables. The results indicate that both female-headship rates and AFDC recipient rates are significantly affected by the relative size of AFDC payments in white and nonwhite populations alike.

The Perceived Budget Constraint under Social Security: Evidence from Reentry Behavior

If, as is usually assumed, older individuals face a continuous choice of work hours without fixed costs or take account of the actuarial adjustment of Social Security benefits postponed as a result of the earnings test, the earnings limit should not affect their labor supply before age 65. We test, and reject, these assumptions by estimating the hazard function for labor market reentry after retirement, using white men in the Retirement History Survey. We find that the earnings limit does affect reentry and that older men behave myopically, responding to current benefits rather than to Social Security wealth. Several policy implications follow.

The labor supply curve under income maintenance programs

Abstract The paper is a theoretical analysis of the supply curve of labor under the particular nonlinear budget constraint arising from earnings-tested income maintenance programs. The joint effects of the income benefit, the implicit tax on earnings and the earnings disregard are analyzed, demonstrating that the individual supply curve must have a backward-bending section and a discontinuity; that changes in the tax above some critical rate have no effect on labor supply, and that the aggregate effect of a reduction in the tax below the critical rate is ambiguous. In the absence of an earnings disregard, the benefit may constitute a fixed cost of labor force participation, causing a higher reservation wage and a discontinuity of supply at that wage.

True Age Profiles of Earnings: Adjusting for Censoring and for Period and Cohort Effects

Age profiles of employment and earnings, corrected for truncation and net of period and cohort effects, are estimated for white married males and unmarried females from longitudinal data covering ages 40-68. The truncation correction is based on a maximum likelihood procedure utilizing all information in the censored sample. The adjustment for period and cohort effects uses individual year and birth year means and fully identifies all nonlinear effects. The earnings profile of males resembles that of other studies but declines later. Employment and earnings of women increase until the early fifties and begin to decrease in the early sixties.

Offers or Take-up: Explaining Minorities’ Lower Health Insurance Coverage

There is considerable evidence that minorities are less likely than whites to be covered under employment-based health insurance. In 2001, rates of Hispanic full-time workers were 21 and 15 percentage points lower than those of non-Hispanic white men and women. For policy purposes, understanding whether these disparities are generated by differences in the likelihood of being in a job offering coverage or in decisions regarding take-up of offered coverage is critical. We find significant effects of race and ethnicity on offers but not on take-up, controlling for job and demographic characteristics including nativity. Magnitudes of these effects differ by gender and household composition.

How much do respondents in the health and retirement study know about their contributions to tax-deferred contribution plans? A cross-cohort comparison *

We use information from Social Security earnings records to examine the accuracy of survey responses regarding participation in tax-deferred pension plans. As employer-provided defined benefit pensions are replaced by voluntary contribution plans, employees’ understanding of the link between their annual contributions and their post-retirement wealth is becoming increasingly important. We examine the extent to which wage-earners in the Health and Retirement Study (HRS) correctly report their inclusion in tax-deferred contribution plans and, conditional on inclusion, their annual contributions. We use three samples representing different cohorts in three different periods: the original HRS cohort interviewed in 1992 at ages 51–56, the War Babies cohort interviewed in 1998 at ages 51–56, and the Early Baby Boomer cohort interviewed in 2004 at the same ages. Our findings indicate that while respondents interviewed in 1998 and 2004 were more likely to correctly report whether they were included in defined contribution plans, they were no more accurate when reporting whether they had contributed to their plans than respondents interviewed in 1992. Contributors in the three cohorts, moreover, overstated their annual contributions and thus would be likely to realize lower than expected account balances at retirement. The magnitude of this error is not negligible. In all three cohorts, the mean reporting error (the absolute difference between respondent-reported and Social Security earnings record contributions) was approximately 1.5 times larger than the mean contribution in the W-2 earnings record.

The Retirement Process in the United States: Mobility Among Full-Time Work, Partial Retirement, and Full Retirement

The older American male’s long-term trend toward withdrawal from the labor force has continued into the 1980’s, though at a decelerating rate. At all ages over 57, male labor force participation during a year dropped by 3–4 percentage points from 1977 to 1982; whereas in the preceding 5 years it had dropped by 7–12 percentage points. While 87 percent of 55–57 year olds still worked sometime during 1982, the dropoff with advancing age was steep; only 60 percent of 62–64 year olds and 25 percent of 68–73 year olds worked at all in that year. The decline in participation from 1977 to 1982 by men over 65 came entirely at the expense of part-time work; the small fractions working substantially full-time remained stable. On the other hand, men aged 62–64 moved out of both full-time and part-time work; while men under age 62 shifted into part-time out of full-time work.2)

The Incidence of Job Loss: The Shift from Younger to Older Workers, 1981-1996

The relationship between job loss and age is examined using CPS Displaced Worker Supplements from 1984-1998. Job loss rates of full-time workers aged 25-39 and 45-59 are compared by gender and, within gender, by education, occupation, and industry. Differences-in-differences and regression analyses indicate that the historic relative advantage of older workers declined over this period, but only among men. Job loss among younger men dropped fairly steadily from 1981-82 through the early 1990s recession and thereafter, while rates of older men, especially blue-collar workers, fell until the later 1980s then increased sharply to match those of younger workers throughout the 1990s. These findings suggest that factors specific to the 1990s recession may have accounted for the decline in the long-standing practice of inverse-seniority layoffs.