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Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individual-specific Effects

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  • Jürgen Maurer

    (Institute of Health Economics and Management and Faculty of Business and Economics, University of Lausanne)

  • Roger Klein

    (Rutgers University)

  • Francis Vella

    (Georgetown University)

Abstract

We use panel data from the U.S. Health and Retirement Study, 1992–2002, to estimate the effect of self-assessed health limitations on the active labor market participation of older men. Self-assessments of health are likely to be endogenous to labor supply due to justification bias and individual-specific heterogeneity in subjective evaluations. We address both concerns. We propose a semiparametric binary choice procedure that incorporates nonadditive correlated individual-specific effects. Our estimation strategy identifies and estimates the average partial effects of health and functioning on labor market participation. The results indicate that poor health plays a major role in labor market exit decisions. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 3 (August)
Pages: 764-774

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Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:764-774

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Cited by:
  1. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2009. "Does Leaving Welfare Improve Health? Evidence for Germany," CEPR Discussion Papers 7421, C.E.P.R. Discussion Papers.
  2. Berg, Claudia & Emran, M. Shahe & Shilpi, Forhad, 2013. "Microfinance and Moneylenders: Long-run Effects of MFIs on Informal Credit Market in Bangladesh," MPRA Paper 49040, University Library of Munich, Germany.
  3. Fernández-Val, Iván & Savchenko, Yevgeniya & Vella, Francis, 2013. "Evaluating the Role of Individual Specific Heterogeneity in the Relationship Between Subjective Health Assessments and Income," IZA Discussion Papers 7651, Institute for the Study of Labor (IZA).
  4. Stefanie Schurer, 2008. "Discrete Heterogeneity in the Impact of Health Shocks on Labour Market Outcomes," Melbourne Institute Working Paper Series wp2008n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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