The Rise of Retirement Among African Americans: Evidence from Union Army Records

Abstract

I document trends in black and white retirement rates and in living arrangements among retirees. I show that the retirement rates of both blacks and whites rose between 1900 and 1930 but that convergence in black and white rates and in living arrangements only occurred between 1930 and 1950. I examine whether rising income explains the rise in black retirement rates prior to 1930 and whether rising income and the institution of Social Security in 1935 led to convergence by looking at the impact of the first pension program available to both blacks and whites, that serving Union Army veterans. I find that blacks were 2 to 5 times as responsive as whites to income transfers in their retirement decisions and 6 to 8 times as responsive in their choice of independent living arrangements. The results suggest that income effects from the institution of Social Security explain up to half of the convergence in black-white retirement rates and in living arrangements.