Does Bridge Employment Mitigate or Exacerbate Inequalities Later in Life?

Abstract

Abstract Most older Americans with career employment change jobs at least once before retiring from the labor market. Much is known about the prevalence and determinants of these bridge jobs, yet relatively little is known about the implications of such job changes—compared to direct exits from a career job—upon economic disparities in later life. In this article, we use 26 years of longitudinal data from the Health and Retirement Study to document the various pathways that older Americans take when exiting the labor force, and examine how bridge employment affects nonhousing wealth and total wealth, including the present discounted value of Social Security benefits. We find that gradual retirement in the form of bridge employment neither exacerbates nor mitigates wealth inequalities among Americans who hold career jobs later in life. That said, we do find some evidence that wealth inequalities grow among the subset of older career workers who transition from career employment to bridge employment at older ages. One policy implication of our article is that it provides evidence that might allay concerns about the potential for disparate financial impacts associated with the gradual retirement process.