IRP 21-01: Labor Force Transitions, Income Changes, and Poverty Entries among Older Workers During the COVID-19 Pandemic

File(s)
Date
2021Author
Freitag, Callie
Hill, Heather D.
Publisher
Center for Financial Security
Metadata
Show full item recordAbstract
Economic downturns, like the one caused by the COVID-19 pandemic, can change retirement plans by prompting early retirement or inducing workers to remain in the labor force longer. These changes in the timing and circumstances of later-life labor force transitions can have significant impacts on the income sources available to those making the transition—and thus the likelihood of experiencing poverty—but prior studies do not examine these outcomes. Using the Current Population Survey March ASEC from 2018-2021, this study examines older adults’ (age 50 or over) labor force transitions during the COVID-19 pandemic. We contribute to prior literature by focusing specifically on trends, and the economic consequences of two types of labor force exits: retirement or non-retirement. Our main analysis estimates associations between labor force transitions and entries into poverty and describes changes in income during labor force transition years. We find that transitioning out of the labor force for any reason is significantly associated with substantial reductions in total income and a higher likelihood of entering poverty. However,
these associations did not change much throughout the pandemic. We also find that COVID-19 Economic Impact Payments and Unemployment Insurance were important protections against
earnings losses in 2020-21, but especially for those who transitioned out of the labor force. This study also sheds light on the fluidity of retirement and labor force participation in later life.
Subject
older adults
COVID-19
retirement
labor force exits
poverty
I3 Welfare, Well-Being, and Poverty
J1 Demographic Economics
J2 Demand and Supply of Labor
Permanent Link
http://digital.library.wisc.edu/1793/84526Type
Working Paper
Description
The COVID-19 pandemic disrupted labor force participation, especially for older workers. Early exit from the labor force can have significant impacts on older adult’s economic wellbeing for the rest of their lives. This paper uses data from the Current Population Survey to examine changes in labor force transitions, income, and poverty entries among workers aged 50 and older during the COVID-19 pandemic.
Citation
Freitag, Callie and Heather D. Hill. 2021. "Labor Force Transitions, Income Changes, and Poverty Entries among Older Workers During the COVID-19 Pandemic." FY2021 Research Projects: IRP Small Grant Award. Retirement & Disability Research Center. https://cfsrdrc.wisc.edu/project/irp21-01.