Economic conditions
and labor force participation vary significantly across the states of the Union.
Despite these marked differences, little is known about the reasons for such
variations in retirement patterns.
Using the Current Population
Survey for the period 1977-2007, this paper demonstrates that the differences
in the labor force participation of men age 55-64 are related to the labor market
conditions, the nature of employment, and the employee characteristics in each
state as well as a pseudo replacement rate. These variables explain more than
one-third of the total variation.
Even moving to a fixedeffects
model only cuts the explanatory power by half. The question remains, however,
whether these relationships reflect different populations or unique aspects
of the state. To answer that question we turn to the Health and Retirement Study
(HRS).
We estimate equations for
the probability of working and for the expected retirement for men in their
late fifties and early sixties. In each case, the first equation includes just
the state-level variables and the second the state-level variables and the HRS
demographic and economic information for each individual.
The results show that the
state-level variables explain almost none of the variation in the probability
of working or the expected retirement age, but most of the state-level variables
are statistically significant both before and after the inclusion of the HRS
information.
;
