PENSIONS AND RETIREMENT - EVIDENCE FROM UNION ARMY VETERANS

I investigate the factors that fostered rising retirement rates prior to social security and most private-sector pensions by estimating the income effect of the first major pension program in the United Sates, that covering Union Army veterans. The elasticity of nonparticipation with respect to Union Army pension income was 0.73. The findings suggest that secularly rising income explains a substantial part of increased retirement rates. Comparisons with elasticities of nonparticipation with respect to social security income suggest that the elasticity of labor force nonparticipation may have decreased with time, perhaps because of the increasing attractiveness of leisure.