However, the retirement decision may also be a®ected by working hours constraints imposed
by the employer. A lower bound on the number of working hours may discourage older workers
from continuing to work longer, thereby resulting in a discrete drop in working hours where
older workers retire, and fall from working full-time to not working at all. This might well be
the case in the UK, where the proportion of older workers working more than 50 hours per week
is much higher, on average, than in other OECD countries (OECD (2006)). These long hours
may explain the large percentage of male workers who would like to work less hours and hence
are denoted over-employed (Figure 1). Possibly, due to a larger hours adjustment for males
than for females in the years preceding retirement, the proportion of over-employed women is
increasing as they approach retirement, while this proportion is more or less constant among
male workers (but remains at a higher level). The ¯gure suggests that working hours °exibility
may be e®ective in reducing the proportion of over-employment, thereby potentially reducing
labor market exit. Using HRS data, Penner et al. (2002) conclude that among older American
workers who left their job between 1992 and 2000 about 13% would have stayed in their job
if they could have reduced their number of working hours. In Sweden, about 7 percent of the
workers aged 50 years and above claim to have physical problems which restrict them from
continuing work in the present occupation until the o±cial retirement age, but that shortening
working hours would solve the problem (WadensjÄo (2006)).