The Labour Supply of Older Americans
Alicia H. Munnell and Steven A. Sass
(2007) Center of Retirement Research Boston College.

This paper summarizes what is known about the labor supply of older men defined as those 55 and over. The topic is of great interest because older individuals will comprise a much greater portion of the population, so their labor supply will have a significant impact on national output, tax revenues, and the cost of means-tested programs. Most importantly, a greater proportion of older individuals will need to work than do at present, because retirement income systems are contracting and working longer is the only way for most to ensure financial security in their old age. The focus is on men, because women’s work patterns reflect the increasing participation of cohorts over time as well as the factors that affect retirement behavior.

What is particularly interesting in this paper is of course whether the factors identified in the study represent factors that can be extrapolated to other countries and thus whether we can identify some universal points on the labour supply of ageing workers. As always, cultural differences may exert a considerable influence here and in a scientific light the issue of causality might be particularly difficult because it is difficult to see where culture begins and where it ends. Not surprisingly, the paper's conclusion is situated in the context of US regulatory context and here the paper notes that while the partipation of older men (say 55-64) has risen since the mid 1990s it is unlikely to grow at the same pace. The authors field a projection that by 2030 about 75% of men aged 55-64 will be in the labour force up from 70% today but, as the authors note, not near the 80% in the 1960s and 1970s where social security for the elder was not available to same degree. More importantly though in the context of the global forces of ageing the following excerpt describing the 'nature' of the elderlies' labour supply is quite important ...

Even today, with the elimination of the earnings test after the Normal Retirement Age and an actuarially fair Delayed Retirement Credit, the majority of workers continue to claim their benefits as soon as they become available. Another important factor is the increased mobility of older workers, which exposes them to the vagaries of the labor market. Extended and difficult job searches as well as the prospect of low wages may cause many older workers to simply give up. Moreover, older people have a strong preference for part-time work and flexible schedules, which to date employers have been reluctant to accommodate. Finally, 15 percent to 20 percent of older people are probably not healthy enough to work beyond age 62.

Read the full paper:
http://crr.bc.edu/images/stories/Working_Papers/wp_2007-12.pdf