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Assessing Knowledge of Retirement Behavior
legislation to protect the jobs of older Americans—firms are forced to buy out workers whom they might otherwise force out. Some idea of the "price" of such buyouts would be useful: What percentage of the target group will accept a buyout of given size? How is the buyout function affected by worker characteristics? By the size of Social Security payments? Once these characteristics are better understood, we will be in a better position to understand why firms implement the policies. Lumsdaine, Stock, and Wise(1990) and Hackett (1995) offer a start on this research program.32 Unfortunately the temporary nature of these offers makes data collection difficult; at any single point in time, few firms have recently completed a buyout. Some choice-based samples will no doubt have to be constructed.
Employer-Provided Health Insurance for Retirees The mushrooming of health care costs and accountant concerns about these liabilities has brought the issue of employer-provided health insurance for retirees to the fore. Scott, Berger, and Garen (1995) provide evidence that the indirect effect on the new-hire rate of older workers of providing this perquisite is negative and large in absolute value. Macpherson (1992) reports, from data drawn from the August 1988 Current Population Survey, that retirement health benefits are most prevalent in the same types of workplaces that offer defined benefit pensions—large, unionized firms with highly paid, full-time workers. Barron and Fraedrich (1994) confirm Macpherson's firm size results and also find a robust relationship between the firm's provision of retirement health insurance and the extent to which it trains new hires. They attribute this correlation to the self-screening properties of retirement health insurance, although the motivational attribution is not compelling. The issue of how coverage will evolve as costs continue to rise and the structure of pensions change is of obvious policy importance.
The government, of course, is also a major employer. In the review to follow, I focus on private employers, though government employers face many of the same employment problems and in many cases adopt similar policies toward older workers.
In his conference comments, Dallas Salisbury argued convincingly that it is important to separate equilibrium from disequilibrium situations. "The strongest unions have been the most successful in negotiation of early retirement ages. Employers in the public and private sector regularly attempt to negotiate these ages up, suggesting that it is primarily demand in the first instance, possibly turning to a reduction mode at points when an employer wishes to downsize (recent federal government buyouts support this pattern).
In his conference comments, Dallas Salisbury stressed the diversity of defined benefit plans, noting that 45 percent of defined benefit plans offer lump-sum payouts.
I introduce government actions only when they are designed to manage aspects of the employment relationship, and I consider the motivations for the government's actions only in passing.
The data clearly indicate that morbidity or sickness rates increase with age. In an interesting study of track and field performance by age, Fair (1991:Abstract) reports: "For most of the running