The impact of health changes on labor supply: evidence from merged data on individual objective medical diagnosis codes and early retirement behavior

Health Economics
Bent Jesper Christensen, Malene Kallestrup-Lamb

Abstract

The justification bias in the estimated impact of health shocks on retirement is mitigated by using objective health measures from a large, register-based longitudinal data set including medical diagnosis codes, along with labor market status, financial, and socio-economic variables. The duration until retirement is modeled using single and competing risk specifications, observed and unobserved heterogeneity, and flexible baseline hazards. Wealth is used as a proxy for elapsed duration to mitigate the potential selection bias stemming from conditioning on initial participation. The competing risk specification distinguishes complete multiperiod routes to retirement, such as unemployment followed by early retirement. A result on comparison of coefficients across all states is offered. The empirical results indicate a strong impact of health changes on retirement and hence a large potential for public policy measures intended to retain older workers longer in the labor force. Disability responds more to health shocks than early retirement, especially to diseases of the circulatory, respiratory, and musculoskeletal systems, as well as mental and behavioral disorders. Some unemployment spells followed by early retirement appear vol...Continue Reading

References

May 27, 1999·Journal of Health Economics·D S Dwyer, O S Mitchell
Nov 15, 2002·The New England Journal of Medicine·Mitchell D WongSusan L Ettner
Jul 8, 2009·Health Economics·Nabanita Datta Gupta, Mona Larsen

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Citations

Jun 27, 2015·Journal of Epidemiology and Community Health·Fenna R M LeijtenAlex Burdorf
Dec 22, 2017·BMC Public Health·Evangelia DemouKate Hunt
Feb 12, 2019·Canadian Journal on Aging = La Revue Canadienne Du Vieillissement·Monique A M GignacCameron A Mustard
Sep 29, 2019·International Journal of Environmental Research and Public Health·Xin DengYanbin Qi
Sep 2, 2018·BMC Public Health·Micky ScharnAllard J van der Beek
Feb 24, 2018·Scandinavian Journal of Public Health·Pekka Ilmakunnas, Seija Ilmakunnas
Jun 14, 2021·Social Science & Medicine·Jamie O'HalloranDorte Gyrd-Hansen
Mar 18, 2021·American Journal of Epidemiology·Wending LiTangchun Wu

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