Calling older workers back to work

Population aging in advanced economies could have significant macroeconomic implications, unless more individuals choose to participate in labor markets. In this context, the steep increase in the share of older workers who remain economically active since the mid1990s is an overlooked yet encouraging trend. We identify the drivers of the rise in participation of the elderly relying on cross-country and individual-level data from advanced economies over the past three decades. Our findings suggest that the bulk of the increase in their participation is driven by gains in educational attainment and changes in labor market policies, such as the tax benefit system, and pension reforms. Urbanization and the increasing role of services also contributed, while automation weighed on their participation.