Do Local Labor Market Conditions Shape Labor Force Transitions of Older Workers?

Diane K. McLaughlin, Pennsylvania State University

Personal and household resources associated with older workers' movements out of and into the labor force are well documented. Less well known is how local labor market conditions are associated with these movements. Drawing on the PSID merged with county-level data from the Regional Economic Information Service and other sources, this paper examines whether older men's and women's labor force behavior is linked to local conditions. I estimate competing risk hazard models of retirement or disability as well as models of reentry from these states. The results clearly show that the local labor market's industrial structure is significantly associated with the risk of retirement even after controlling for the individual's human capital, health, and occupation.