Reemployment and Retirement of Displaced Older Workers

Wei Chi, University of Minnesota

Most unemployment studies focus on displaced workers of primary age. Retirement studies focus on older workers who retire from work. This study investigates retirement and reemployment of older displaced workers. The effect of UI benefits, private pension, and social security on older displaced workers' search effort, reemployment hazard, and retirement are examined. Dynamic programming technique is employed to model job search after displacement. The theoretical analysis predicts that UI benefits decrease reemployment and retirement probability and pension incomes increase retirement probability. Health and Retirement Survey (HRS) data are used to test the theoretical predictions. A competing risk model is developed with employment and retirement as two competing risks. Pension and social security benefit value are calculated. UI benefit amount are imputed based on earning history and state of residency. The exogenous variation of state UI benefit formula is used to identify the impacts of UI on reemployment and retirement.