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A sequential model of older workers' labor force transitions after a health shock

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Author Info

  • Sergi Jiménez-Mart�n

    (Department of Economics, Universitat Pompeu Fabra, Barcelona, Spain)

  • José M. Labeaga

    (FEDEA and UNED, Madrid, Spain)

  • Cristina Vilaplana Prieto

    (Universidad Católica San Antonio de Murcia, Spain)

Abstract

In this paper we estimate and validate a three-period sequential model of older workers' labor force transitions following a health|disability shock, using retrospective information from Spanish cross-section data. Central to the analysis are the effects of the various disabilities and their severity. We find that the probability of remaining employed decreases both with age and the severity of the shock. Moreover, we find strong interactions between age and severity for older workers and none for prime-age workers. Suffering any kind of disability reduces the probability of being employed immediately prior to retirement age, and in such cases it is severity which is the strongest indicator. With respect to demographics, we find that female gender, having a retired spouse or being married all reduce the probabilities of both remaining in employment and returning to work following a spell of inactivity; in turn, principal breadwinner status, education and skill levels increase this likelihood. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1163
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 9 ()
Pages: 1033-1054

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Handle: RePEc:wly:hlthec:v:15:y:2006:i:9:p:1033-1054

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. van Ophem, Hans & Schram, Arthur, 1997. "Sequential and Multinomial Logit: A Nested Model," Empirical Economics, Springer, vol. 22(1), pages 131-52.
  2. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
  3. David H. Autor & Mark G. Duggan, 2001. "The Rise in Disability Recipiency and the Decline in Unemployment," NBER Working Papers 8336, National Bureau of Economic Research, Inc.
  4. Jonathan Gruber & Jeffrey D. Kubik, 1994. "Disability Insurance Rejection Rates and the Labor Supply of Older Workers," NBER Working Papers 4941, National Bureau of Economic Research, Inc.
  5. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, vol. 18(2), pages 173-193, April.
  7. Diebold, Francis X & Mariano, Roberto S, 2002. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 134-44, January.
  8. Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February.
  9. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
  10. Kreider, Brent & Pepper, John V., 2007. "Disability and Employment: Reevaluating the Evidence in Light of Reporting Errors," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 432-441, June.
  11. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
  12. Michele Boldrin & Sergi Jimenez-Martin & Franco Peracchi, 1999. "Social Security and Retirement in Spain," NBER Chapters, in: Social Security and Retirement around the World, pages 305-353 National Bureau of Economic Research, Inc.
  13. Hugo Benitez-Silva & Moshe Buchinsky & Hiu-Man Chan & John Rust & Sofia Sheivasser, 1997. "An Empirical Analysis of the Social Security Disability Application, Appeal, and Award Process," Public Economics 9712001, EconWPA, revised 16 Feb 1998.
  14. Bound, John & Burkhauser, Richard V., 1999. "Economic analysis of transfer programs targeted on people with disabilities," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 51, pages 3417-3528 Elsevier.
  15. Janet Currie & Brigitte C. Madrian, 1998. "Health, Health Insurance and the Labor Market," JCPR Working Papers 27, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Emile Tompa, 1999. "Transitions to Retirement: Determinants of Age of Social Security Take Up," Social and Economic Dimensions of an Aging Population Research Papers 6, McMaster University.
  17. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
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Cited by:
  1. Pilar Garcia-Gomez & Hans van Kippersluis & Owen O'Donnell & Eddy van Doorslaer, 2011. "Effects of Health on Own and Spousal Employment and Income using Acute Hospital Admissions," Tinbergen Institute Discussion Papers 11-143/2, Tinbergen Institute.
  2. Pilar Garcia-Gomez & Hans van Kippersluis & Owen O'Donnell & Eddy van Doorslaer, 2011. "Effects of Health on Own and Spousal Employment and Income using Acute Hospital Admissions," Tinbergen Institute Discussion Papers 11-143/2, Tinbergen Institute.
  3. Raquel Vegas Sánchez & Isabel Argimón & Marta Botella & Clara González, 2013. "Old age pensions and retirement in Spain," SERIEs, Spanish Economic Association, vol. 4(3), pages 273-307, August.
  4. Paraponaris, Alain & Teyssier, Luis Sagaon & Ventelou, Bruno, 2010. "Job tenure and self-reported workplace discrimination for cancer survivors 2 years after diagnosis: Does employment legislation matter?," Health Policy, Elsevier, vol. 98(2-3), pages 144-155, December.
  5. Pilar García Gómez, 2008. "Institutions, health shocks and labour outcomes across Europe," Working Papers 2008-01, FEDEA.
  6. Zucchelli, E.; & Harris, M.; & Zhao, X.;, 2012. "Ill-health and transitions to part-time work and self-employment among older workers," Health, Econometrics and Data Group (HEDG) Working Papers 12/04, HEDG, c/o Department of Economics, University of York.

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