Academic Literature

Older Workers in US – A strong willingness to work, especially in jobs with flexible schedules

Older Americans, even those who are long retired, have strong willingness to work, especially in jobs with flexible schedules. For many, labor force participation near or after normal retirement age is limited more by a lack of acceptable job opportunities or low expectations about finding them than by unwillingness to work longer. This paper establishes these findings using an approach to identification based on strategic survey questions (SSQs) purpose-designed to complement behavioral data. These findings suggest that demand-side factors are important in explaining late-in-life labor market behavior and may be the most appropriate target for policy aimed at promoting working longer.


In many advanced economies, the share of the population that is of working age (age 20–64) is projected to fall significantly in the coming decades. In the U.S., for example, the fraction of the population age 65 or older will rise from around 20 percent of the working age population in 2007 to 40 percent by 2050. This dramatic shift poses several economic challenges, notably increased financial strain on public pensions and Medicare.

In response to population aging, many countries are starting to enact or at least consider policies that encourage older workers to work longer. The appropriate policy depends on whether observed patterns of late-in-life labor market behavior more reflect the demand or the supply side of the labor market. Given the importance of separately identifying supply- and demand-side forces, significant research effort has been dedicated to this question. Yet answers remain elusive because there is no obvious behavioral imprint of frustrated desires. On the supply side, lack of employment beyond historically normal retirement ages may represent older workers’ low willingness to continue to work under current market and institutional incentives. On the demand side, employers might be unwilling to adapt pay or work schedules to accommodate changes in older workers’ abilities or desires. Analyses of behavioral data typically require strong assumptions to generate estimates of structural parameters that separately identify causal factors. There is limited credible exogenous variation in the data concerning opportunities to work. Moreover little is known about the opportunity sets generating observed retirement behavior, and many of the choices are confounded by shocks, such as to health of workers or health of firms.

In this paper we introduce an approach to separating supply- and demand-side forces using strategic survey questions (SSQs). These are stated preference questions custom-designed to complement available behavioral data on labor market outcomes. Building on previous work using similar types of survey questions, we designed the SSQs to be comprehensible and meaningful to respondents. We implemented the SSQs in the Vanguard Research Initiative (VRI), a panel of American Vanguard clients more than 55 years old. These SSQs are not confounded by perceived job opportunities. They directly control for job opportunities in hypothetical situations, which allows us to identify willingness to work independent from what workers can expect to find available in the actual labor market. Indeed, we explicitly pose questions that allow us to estimate willingness to work in arrangements that may not currently be prevalent, involving, in par- ticular, a flexible schedule. The SSQ approach is particularly useful in the context of late-in-life work where the gap between the desired and available opportunities may play a more important role. In particular, given the evidence on part-time options being relatively more common among post-career bridge jobs or self-employment, we seek to answer whether older workers would take up jobs with flexible schedules even if that is not part of their current opportunity set.

We find that older workers would work longer if schedules were flexible. Based on the SSQs that offer the option to work shorter hours, many workers would take up this option, even if it involved a more than proportional reduction in earnings. Older Americans, even those who are long retired, have a strong willingness to work, especially in a job with a flexible schedule.
• About 40 percent of retirees, mostly in their late 60s or 70s, are willing to work again at the time of the survey if all the conditions are the same as their last job, including hourly wage, total number of hours, and type of job.
• Willingness to work becomes much stronger if they can choose hours flexibly instead of having to work the same number of hours as in their last job on a fixed schedule. About 60 percent of retirees would be willing to return to work with a flexible schedule. Furthermore, 20 percent of retirees would be willing to take more than a 20 percent hourly wage reduction to do so. This preference for a flexible work schedule is also consistent with actual labor-market transitions of VRI respondents: A flexible schedule is more common in post-career, pre-retirement bridge jobs than career jobs and is commonly reported as a desired characteristic in respondents’ post-career job searches.

Chosen excerpts by Job Market Monitor. Read the whole story at Older Americans Would Work Longer If Jobs Were Flexible

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