Thursday, December 19, 2013

Brookings Issues Report on Retirement Trends in 20 Industrialized Countries: Recession Accelerating Delayed Retirements

A report from the Brookings Institution finds that since Great Recession, the trend toward later retirement in industrialized countries has not only continued, but has accelerated. According to "Impact of the Great Recession on Retirement Trends in Industrialized Countries," by Gary Burtless and Barry Bosworth, when the recession began most rich countries were experiencing an increase in labor force participation rates after age 60. In their paper, they examined whether the downturn slowed or reversed the trend toward higher old-age participation rates, using straightforward time series analysis to test for a break in labor force trends after 2007.
Averaging across all 20 countries in our sample, the pace of labor force participation gains has accelerated since the onset of the Great Recession. As noted, the participation rate of 60-64 year-olds increased at an average rate of 0.4 percentage points a year between 1989 and 2007. Between 2007 and 2012 the participation rate in this age group increased an average of 1.5 percentage points a year. In 12 of the 20 countries, the increase in the trend rate of participation change was statistically significant. The participation rate of 65-69 year-olds increased at an average rate of 0.1 percentage points a year between 1989 and 2007. Since 2007 the participation rate in this age group has increased an average of 0.8 percentage points a year across the sample countries. In 13 of the 20 countries, the rise in the trend rate of participation gain was statistically significant. In the oldest age group, 70-74 year-olds, the trend rate of increase in participation rose from 0.05 percentage points a year between 1989 and 2007 to 0.32 percentage points a year after 2007. In 12 of the 19 sample countries the increase in the pace of participation gain among 70-74 year-olds was statistically significant.
While countries that experienced unusually severe downturns, including Ireland and much of southern Europe, represent exceptions to this generalization, the authors conclude that, on the whole, however, the trend toward later retirement in rich countries has not been reversed as a result of the Great Recession.

According to Robert Samuelson, this study suggests that the "We may be witnessing the last gasp of early retirement" and not just in the United States.

Source: Brookings Institution Paper (December 16, 2013)

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