How Do Local Labor Markets Affect Retirement?

By Leora Friedberg, Michael T. Owyang, Wei Sun, Anthony Webb in Review. The biggest effect of a higher local unemployment rate on older workers is to raise their propensity to stay in their current job. Older workers have fewer voluntary transitions to new jobs when the unemployment rate rises, but they especially have fewer voluntary transitions out of the labor force. Thus, the direct effect of job loss in inducing earlier retirement during recessions is outweighed by retirement delays among those with jobs.

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