The Impact Of Health Changes On Labor Supply: Evidence From Merged Data On Individual Objective Medical Diagnosis Codes And Early Retirement Behavior
AbstractPeople quit the labor force for many different reasons, voluntarily or not, through various arrangements such as unemployment benefits, disability benefits or specially designed early retirement schemes. This paper complements the existing literature by considering a large, register-based sample including objective medical diagnosis codes. We estimate detailed hazard models of duration until retirement, controlling for unobserved heterogeneity and nonparametric baseline hazards, as well as observed heterogeneity through time-varying explanatory variables. These include diagnosis codes, along with a host of demographic, labor market and financial regressors. The panel structure of the data allows following individuals year by year from the age of 50 and precisely measure changes in objectively measured health and other regressors, as well as labor market status. We consider 12 broad, mutually exclusive and exhaustive categories of health diagnoses defined by aggregation across ICD codes. The use of objective medical diagnosis codes should eliminate the justification bias due to self-reports of health, and the large sample size obtained by using register rather than survey data should mitigate the eÂ¤ect of any remaining mismeasurement of true work incapacity. Together, these improvements should help distinguish empirically important effects of health and economic variables on retirement. We distinguish a number of alternative exit routes, in particular, disability, early retirement, unemployment, and others (including out of the labor force and welfare). We estimate both single risk models, lumping all retirement states, and competing risk specifications, including all separate exit routes. Throughout, females are included in the estimations, and we present separate results by gender. We find sizeable differences in retirement behavior across marital status, gender, labor market attachment, occupation, income, and in particular health. We find that the disability ret
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Health Economics.
Volume (Year): 21 (2012)
Issue (Month): (06)
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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749
Other versions of this item:
- Bent Jesper Christensen & Malene Kallestrup Lamb, 2010. "The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior," CREATES Research Papers 2010-62, School of Economics and Management, University of Aarhus.
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
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