Why is There Mandatory Retirement? An Empirical Reexamination

Abstract

A widely cited explanation of mandatory retirement age provisions is the incentives model developed and tested by Lazear. The research reported here builds upon Lazear's empirical framework by adding testable implications drawn from a specific human capital explanation of mandatory retirement. The role of monitoring costs in accounting for mandatory retirement rules is also discussed. The evidence presented, based on data from the NLS mature men sample, indicates that, in addition to the personal characteristics examined by Lazear, a comprehensive explanation of mandatory retirement requires the consideration of both specific human capital and monitoring costs.