Are Older Workers Responding to the Bear Market?

Abstract

In the past year, as the economy has weakened and unemployment has risen, the labor force participation rate for older workers (aged 55-64) has jumped by 2.0 percentage points - an increase unprecedented in post-war U.S. economic history. Recessions typically see very slow or even negative growth in labor force participation. A likely factor contributing to this dramatic change is the steep decline in the stock market that has occurred since the spring of 2000. Plunging stock portfolios may have caused some older workers to postpone retirement and convinced some early retirees to rejoin the labor force.

Keywords: Labor force, stock market, retirement

JEL Classification: J14, J21