The aim of the current project is to explain a common finding among most industrialized countries, namely the increase in older men’s labor force participation since around the late 1990s, which is a stunning reversal from the long declining trend that began in the early 1970s. There are many factors that have been mentioned in the literature that may help explaining this U-shaped pattern.
In the eighth phase of the project, we try to give an overall assessment of the relative contribution of these factors. We first provide graphical evidence of the trends of various variables which may be relevant, with the aim of investigating the presence or absence of common patterns between these factors and labor force participation. Then, through a decomposition analysis, we provide an empirical estimate of the contribution of some of the most prominent drivers – education, health and spouse’s employment - to the overall evolution of labor force participation. Given the evidence presented in this work and the results of the previous papers in this series, we believe that, at least as it regards Germany, much of the change in the trend of older men’s labor force participation registered in the mid-90s may be explained by changes in public pension regulations, and in particular by the phasing in of actuarial adjustments for early retirement. In fact, even if many of the variables studied may have contributed to the overall level of labor force participation, their trend do not show the U-shape pattern observed for labor force participation. The eighth phase started with a project kick-off meeting in Paris in December 2015, and results were presented in Paris in September 2016.
