As in many other OECD countries, the UK labor market is ageing. By 2050, the percentage of
individuals aged 65 and older compared with the total working-age population (aged 20-64) will
rise to 47 percent from 27 percent in 2003 (OECD (2004)). This may exert pressure on public
¯nances and a potential shortage of labor resources. The e®ects of ageing on the labor market
can be mitigated if the trend towards early labor market exit of older workers can be reversed.
In order to understand how this can be achieved, this paper examines the labor supply decision
and workplace restrictions that may limit either the intensive or extensive margins of older
workers' labor supply.