SECTORAL SHIFT AND THE LABOR-FORCE PARTICIPATION OF OLDER MALES IN THE UNITED STATES, 1880–1940

Abstract

The labor-force participation rate (LFPR, hereafter) of older males in the United States has fallen dramatically over the last 120 years.For the discussions of the long-term trend of the labor force participation rate of older males prior to 1940, see Durand, Labor Force; Long, Labor Force; Ransom and Sutch, “Labor” and “Trend”; Moen, Essays and “Labor”; Margo “Labor Force Participation”; Carter and Sutch, “Fixing the Facts”; and Lee, “Long-Term Unemployment.” In 1880 nearly four out of five men 65 and older were gainfully employed. Today, only 15 percent of males at those ages participate in the labor market. Such a sharp decline in the labor market activity of older men has been regarded as one of the most marked changes in the U.S. labor market that the twentieth century witnessed. In addition to the secular rise in retirement, the sharp increase in the share of the aged population has made this retirement behavior a major social issue in the post–World War II era. Many economists have attributed this phenomenon to the implementation and expansion of social insurance programs, especially Social Security.See Boskin, “Social Security”; Parsons, “Decline” and “Male Retirement Behavior”; Hurd and Boskin, “Effect”; and Gruber and Wise, Social Security. See Krueger and Pischke, “Effect”; and Lee “Rise” for some evidence against this argument. However, about half of the fall in the LFPR of older men took place prior to 1940, when the public programs for old-age security were not as yet well developed. Though a number of factors have been suggested, including rising retirement incomes and a changing industrial environment, it is not entirely clear what caused the exit of older workers from the work force during this period.Costa, Evolution.

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