Older Women: Pushed into Retirement by the Baby Boomers?

Older women's patterns of labor supply over the past forty years have differed markedly from those of younger women. Their labor force participation declined sharply during a period of rapid increase for younger women, and then increased significantly while younger women's plateaued and even declined. But there has been an apparent correspondence between the pattern of retirement among women aged 55-69, and the proportion of workers aged 25-34 working part-year and/or part-time. The latter was an effect of overcrowding among the baby boomers as they moved through the labor market. The former is hypothesized here to be a function of the increasing difficulty older women experienced in obtaining "bridge jobs" – part-year and/or part-time – between career and retirement. It has been demonstrated in earlier studies that older women – especially those in lower-wage jobs – often seek such bridge jobs before retirement. And in many cases these bridge jobs are not in the same industry or even occupation as the career job, leading one to suspect that in many cases there might be little transfer of skill or human capital. If this is the case, then the older workers would at least to some extent be in direct competition with younger workers for these jobs. Given difficulty in finding bridge jobs, a higher proportion of older workers might choose to enter retirement directly from career jobs, skipping the bridge jobs. A relative cohort size measure – the number of 25-34 year old women working part-year and/or part-time, relative to the number of older women, at the state level – has been shown here to be highly significant – both statistically and substantively – in explaining changes in older women's annual hours worked, labor force participation, and propensity to retire. In general terms, relative cohort size can be said to have generated between 15-30% of the observed changes in these variables, with the strongest effects being on the propensity to claim Social Security benefits. Somewhat stronger effects were found for older men, in a companion to this study.retirement, women's labor supply, labor force participation, relative cohort size, relative wage, part-time employment, bridge jobs, baby boom

A Note on Inequality Aversion Across Countries, Using Two New Measures

Studies using the Gini Index as a measure of income inequality have consistently found a positive and significant effect of the Gini on both happiness and life satisfaction. Two new measures used here – the ratio of persons in the lowest income decile relative to the number in the highest, and the ratio of the number in the lowest social class relative to the number in the highest, in a given country – as developed from the World Values Survey data, are shown here to have a negative and significant effect on both happiness and life satisfaction. This effect holds overall across countries, and for individuals within most income and class categories.inequality, happiness, life satisfaction

Relative Cohort Size, Relative Income, and Women's Labor Force Participation 1968-2010

Relative cohort size – the ratio of young to prime-age adults – and relative income – the income of young adults relative to their material aspirations, as instrumented using the income of older families their parents' age – have experienced dramatic changes over the past 40 years. Relative cohort size has been shown to cause a decline in men's relative wages – the wages of young relative to prime-age workers – due to imperfect substitutability, and the results here show that this applies perhaps even more strongly to women's relative – and absolute – starting wage. Relative cohort size first declined by 30% and then increased by 47%. Results here show that those changes explain about 60% of the declines in women's starting wage – both relative and absolute – in the first period, and 100% of its increase in the second. Relative income is hypothesized to affect a number of demographic choices by young adults, including marriage, fertility and female labor force participation, as young people strive to achieve their desired standard of living. Older family income – the denominator in a relative income variable – increased by 58.6% between 1968 and 2000, and then declined by 9%. Its changes explain 66% of the increase in the labor force participation of women in their first five years out of school between 1968 and 2000, and 75% of its decline thereafter. The study makes use of individual-level measures of labor force participation, with instrumented wages, and employs the lagged income of older families in a woman’s year-state-race-education group to instrument parental income and hence material aspirations.women's labor force participation, relative income, relative cohort size, sex ratio, women's hours worked

Older Men: Pushed into Retirement by the Baby Boomers?

The United States has experienced over the past forty years an apparent correspondence between the pattern of retirement among men aged 55-69, and the proportion of workers aged 25-34 working part-year and/or part-time. The latter was an effect of overcrowding among the baby boomers as they moved through the labor market. The former is hypothesized here to be a function of the increasing difficulty older men experienced in obtaining "bridge jobs" – part-year and/or part-time – between career and retirement. It has been demonstrated in a series of studies that a large proportion (as many as two-thirds) of older men – especially those in lower-wage jobs – seek such bridge jobs before retirement. And in many cases these bridge jobs are not in the same industry or even occupation as the career job, leading one to suspect that in many cases there might be little transfer of skill or human capital. If this is the case, then the older workers would at least to some extent be in direct competition with younger workers for these jobs. Given difficulty in finding bridge jobs, a higher proportion of older workers might choose to enter retirement directly from career jobs, skipping the bridge jobs. A relative cohort size measure – the number of 25-34 year olds working part-year and/or part-time, relative to the number of older men, at the state level – has been shown here to be highly significant – both statistically and substantively – in explaining changes in older men's annual hours worked, labor force participation, and propensity to retire, and propensity to claim Social Security benefits. In general terms, relative cohort size can be said to have generated between 25-40% of the observed changes in these variables, with the strongest effects being on the propensity to claim Social Security benefits. Somewhat weaker effects were found for older women, in a companion to this study.retirement, men's labor supply, labor force participation, relative cohort size, relative wage, part-time employment, bridge jobs, baby boom

Re-Visiting the Easterlin Hypothesis: Marriage in the U.S. 1968-2010

This study tests the effect of relative income – younger people's earning potential relative to their aspirations, as approximated by older families' income – on the proportions married, by sex, in the first fifteen years out of school. It finds that relative income has become a better measure to use, than relative cohort size, because of a disconnect that has developed between the two as a result of rising female labor force participation among older women that has inflated older families’ income faster than older men's earnings. The results are highly supportive of the Easterlin relative income hypothesis, finding a dominant negative effect of older family income that extends due to postponement effects even into groups 11-15 years out of school. But in addition it finds a strong but changing effect of the female wage: positive among women 0-5 years out of school, although slowly declining over time, but negative among the older women with a dominant positive time trend that has produced a positive effect in the last decade. The elasticity with respect to older family income suggests that it was responsible for 16% of the observed decline in the proportion of women 0-5 years out of school who were married, and 23% of the proportion for the men in the same group. There is in addition, however, a very strong negative time trend.Easterlin hypothesis, relative cohort size, relative income, marriage, marriage squeeze

Re-Visiting the Easterlin Hypothesis: U.S. Fertility 1968-2010

This study tests the effect of relative income – younger people's earning potential relative to their aspirations, as approximated by older families' income – on two measures of fertility: the proportion of women with an own child under one year of age, and the proportion of women with at least one own child under eighteen. The results are highly supportive of the Easterlin relative income hypothesis, finding a dominant negative effect of older family income that extends due to postponement effects even into groups 11-15 years out of school. Increases in older family income are found to account for 42% of the decline in the proportion of women with a newborn, and 37% of the decline in the proportion with at least one own child, among women 0-5 years out of school. In addition, the study finds a strong but changing effect of the female wage: positive among women 0-5 years out of school, although slowly declining over time, but negative among the older women with a dominant positive time trend that has produced a positive effect in the last decade. It is hypothesized that the observed pattern of increases in fertility among women with higher levels of education over the last decade has been a function of this emerging positive effect of the female wage, among older more educated women.fertility, relative income, relative cohort size, Easterlin hypothesis

Relative Cohort Size: Source of a Unifying Theory of Global Fertility Transition

New abstract....

Reversals in the Patterns of Women's Labor Supply in the U.S., 1976-2009

Despite strong increases in women's labor force participation – especially among married women with children – in the 1980s, and somewhat less strong increases in the 1990s, the first decade of the twenty-first century has seen declines across the board. These have been especially marked among single women, women with no children, and women with more than 16 years of education. Single women with no children have experienced declines of 7.2, 6.2 and 3.6 percentage points since the late 1980s, among women with less than 16, 16, and more than 16 years of education, respectively. Own-wage elasticities have increased since 2000, after decreasing in the previous 20 years, and the absolute value of cross-wage elasticities has also increased, after declining for at least 20 years. Despite this, the absolute value of elasticities with respect to the presence of children has for the most part continued to decline. Measured factors cannot explain the marked declines in hours worked that have been observed, suggesting that while the labor supply function was hypothesized to have shifted to the right in the 1980s and 1990s, it has shifted back to the left since the late 1990s. And the characteristics of single and childless women dropping out of the labor force after 1999 have changed: they on average had worked more hours, earned more per hour, enjoyed less other income, and had fewer children, than those who had dropped out prior to 1999.women's labor force participation, women's labor supply, opt-out revolution, women's own-wage elasticities, effect of children on women's labor force participation

The Role of Relative Cohort Size and Relative Income in the Demographic Transition

This paper summarizes the results of other analyses by the author with regard to the importance of relative cohort size (RCS) in determining male relative income (the income of young adults relative to prime-age workers) and general patterns of economic growth, and in turn influencing fertility in the currently more-developed nations. It then goes on to demonstrate that these same effects appear to have been operating in all of the 100-odd nations which have experienced the fertility transition since 1950. Parameter estimates based on the experience of all 189 countries identified by the United Nations between 1950 and 1995 are used to simulate the effects on fertility of migration from Third to First World countries. This exercise suggests that we get the best of all possible outcomes with migration: population is reduced in overcrowded Third World nations, total world population growth is substantially reduced, and scores of children are given the opportunity of growing up with all the educational and health advantages of United States residents

Relative Cohort Size: Source of a Unifying Theory of Global Fertility Transition

Using United Nations estimates of age structure and vital rates for nearly 200 nations at five-year intervals from 1950 through 1995, this paper demonstrates how changes in relative cohort size appear to have affected patterns of fertility across nations since 1950--not just in developed countries, but perhaps even more importantly in countries as they pass through the demographic transition. The increase in relative cohort size (defined as the proportion of the population aged 15 to 24 relative to that aged 25 to 59) which occurs as a result of declining mortality rates among children and young adults during the demographic transition, appears to act as the mechanism of transmission which determines when the fertility portion of the transition begins. As hypothesized by Richard Easterlin, the increasing proportion of young adults would generate a downward pressure on young men\u27s relative wages, which in turn causes young adults to accept a trade-off between family size and material well-being, setting in motion a cascade or snowball effect in which total fertility rates tumble as social norms regarding acceptable family sizes begin to change. Thus relative cohort size can be thought of as the mechanism which prevents excessive rates of population change--reducing fertility when previous high rates, in combination with low mortality rates, have caused relative cohort size to increase, and increasing fertility when previous low rates have caused relative cohort size to decline