vlog Faculty Research Working Paper Series
vlog Working Paper No. RWP11-007
January 2011
Abstract
This is the introduction and summary to the fifth phase of an ongoing project on Social Security Programs
and Retirement Around the World. The first phase described the retirement incentives inherent in plan
provisions and documented the strong relationship across countries between social security incentives
to retire and the proportion of older persons out of the labor force. The second phase documented
the large effects that changing plan provisions would have on the labor force participation of older
workers. The third phase demonstrated the consequent fiscal implications that extending labor force
participation would have on net program costs—reducing government social security benefit payments
and increasing government tax revenues. The fourth phase presented analyses of the relationship between
the labor force participation of older persons and the labor force participation of younger persons in
twelve countries. We found no evidence that increasing the employment of older persons will reduce
the employment opportunities of youth and no evidence that increasing the employment of older persons
will increase the unemployment of youth.
This phase is intended to set the stage for and inform future more formal analysis of disability insurance
programs, with this key question: Given health status, to what extent are the differences in LFP across
countries determined by the provisions of disability insurance programs? Here we first consider changes
in mortality over time and in particular the relationship between mortality and labor force participation,
thinking of mortality as one indicator of health that is comparable across countries and over time in
the same country. We then consider how mortality is related to other indicators of health status, in
particular self-assessed health and then how trends in DI participation are related to changes in health.
Finally we consider the effect on disability insurance participation of “natural experiments” in which
the disability insurance reforms were not prompted by changes in health status or by changes in the
employment circumstances of older workers. We find that these “exogenous” reforms can have a
very large effect on the labor force participation of older workers.
Citation
Milligan, Kevin, and David A. Wise. "Social Security and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms." vlog Faculty Research Working Paper Series RWP11-007, January 2011.