Research: Is Continued Work Linked to State Economics or Individual Characteristics?

The Center for Retirement Research at Boston College has released a research report investigating some stark differences in labor force participation rates of men aged 55-64 in different states--for example, West Virginia has a participation rate below 60%, while South Dakota has a participation rate of nearly 90%. The study ("Do State Economics or Individual Characteristics Determine Whether Older Men Work? "), authored by Alicia H. Munnell, Mauricio Soto, Robert K. Triest, and Natalia A. Zhivan, concludes that while differences in the nature of state economies, or the characteristics of their employers, affect the labor force participation rates of older workers, individuals characteristics are far more important in terms of extending working careers.

Factors that vary among states that affect participation rates include a pseudo replacement rate, the unemployment rate, the percent of men self-employed, percent of men in manufacturing, percent of men aged 55-64 with a college degree, and the ratio of men aged 55-64 to the total population. Individual factors that can affect participation were grouped into three categories: demographics (age, college, nonwhite, fair/poor health, and married), characteristics of the spouse (working, fair/poor health, and earnings), and respondent’s wealth (owns a home and financial assets).

As expected, older individuals and individuals in fair/poor health are less likely to be working than their counterparts. Having greater financial wealth is associated with a low probability of working. Having a college degree, having a working spouse or spouse in poor/fair health, and being a homeowner are associated with a higher probability of being employed. While having a high-earning spouse is associated with a lower probability of working relative to having a low-earning spouse, overall married men are more likely to be working than singles.

Accordingly, the authors conclude that the best way for policymakers to help struggling states is to develop policies that target individuals with particular characteristics rather than states themselves.

Source: Boston College Center on Aging & Work Issue Brief No. 8-13 (September 2008)