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Pensions and Participation: Evidence from World War II Veterans in Australia

David Rodgers

Abstract: Older male labour force participation in Australia plummeted in the last three decades of the twentieth century. This paper investigates the extent to which this fall in participation was due to a large share of these older men having fought in World War II. Australian World War II veterans could access retirement and disability benefits that the rest of the population could not; they also had worse health than non-veterans. Sharp quasi-random variation in service across birth cohorts in Australia enables the effects of WWII service to be measured. WWII veterans had slightly lower labour force participation over prime working years (around 1 percentage point lower in their late 40s), and then much lower participation from the age of 60 onwards (around 17 percentage points lower in their early 60s). Sixty was the access age for the retirement pension given to veterans. Survey data indicate that the retirement expectations of veterans, when young, were clustered at this age. Various measurements of the health effects of WWII service indicate ill health is unlikely to explain the sharp fall in labour participation at sixty. Despite these findings, in aggregate, WWII service can explain only a modest share of the fall in older male labour participation in Australia in the late twentieth century, suggesting other factors must be responsible for most of the fall. These results contribute to the litera- ture on the labour supply effects of retirement and disability programs. In particular, they are consistent with earnings tests having large effects on participation and program parameters framing retirement decisions.



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