THE LABOR-FORCE PARTICIPATION OF ELDERLY MALES IN JAPAN

The estimated elasticity of the probability of retirement with respect to social security retirement benefits declines as individuals age. The negative impact of social security retirement benefits on full-time workers is much greater than the impact on part-time workers for all age groups. The earnings test in Japan is, therefore, more effective for full-time workers than for part-time workers among the elderly. Social security retirement benefits also provide the elderly with an incentive to prolong their unemployment status. The marginal effect of the market unemployment rate on full-time work is significantly larger than that on part-time work and both effects are negative. The elasticity of retirement with respect to the market unemployment rate for those in their 60s is two to three times larger than for those aged 70 and over. The labor force behavior of those in their 60s is quite responsive to changes in labor market conditions. The results also suggest that family and environmental surroundings have significant influences on the labor force participation of the elderly in Japan. J. Japan. Int. Econ., March 1990, 4(1), pp. 1-23. National Bureau of Economic Research, 269 Mercer Street, New York, New York 10003, and Department of Economics, Rutgers-The State University, Camden, New Jersey 08102. © 1990.