Mandatory retirement and labor-force participation of respondents in the Retirement History Study

Abstract

The Age Discrimination in Employment Act (ADEA) was amended in 1978 to prohibit mandatory retirement before age 70 in most occupations. The impact of this legislation on the probability of older persons remaining in the labor force is the primary concern of this article. Specifically, questions concerning which older workers are affected by mandatory-retirement provisions and the extent to which they are forced to retire and leave the labor force are examined. Tabular analysis of data from the Retirement History Study on persons aged 62-63 in 1969 shows significant variation in mandatory-retirement coverage between the public and private sectors and across industries, occupations, and demographic groups. Until age 65, the labor-force participation rate of those facing compulsory retirement is higher than or equal to that of those not covered but it drops significantly below the noncovered rate after 65. Logit analysis of the labor-force participation of persons before and after age 65 indicates that mandatory retirement at that age reduces the probability of retirement by approximately 16.7 percentage points for white men wage earners. This results in a decline in the labor-force participation rate of all men aged 66-67 of approximately 4 percentage points.