Is it retirement or unemployment? Induced ‘retirement’ and constrained labour supply among older workers

Abstract

This paper uses the 1986 Labour Market Activity Survey of Statistics Canada to examine the importance of labour demand for hours of work and labour force participation among older workers. It tests a model of constrained labour supply against a nested unconstrained alternative and concludes that constraints on weeks of work are empirically significant for older workers. A significant fraction of ‘retirement’ decisions are also influenced by the belief that there are ‘no jobs available’.