In or Out or Somewhere in Between? The Determinants of Gradual Retirement

The very definition of retirement has changed. Rather than leaving the labor force completely, many full-time workers engage in gradual retirement. Gradual retirement involves leaving full-time employment for part-time employment, either with the same employer or another employer. This paper examines the determinants of the gradual retirement decisions of older workers. The paper uses panel data from the PSID and a random-effects ordered-logit model. The results indicate that older individuals, Blacks, and individuals with higher non-labor income are more likely to engage in gradual or full retirement. They also indicate that married individuals, college graduates, and those who are in good health are less likely to either gradually or fully retire. The 60s are the time most people engage in gradual retirement.