Additional information is available for the following registered author(s):

• Mona Larsen
• Nabanita Datta Gupta

impact of health on retirement due to “justification bias”. A few recent studies based on younger cohorts approaching

retirement age have found little support for this hypothesis. This paper adds fresh evidence to this debate by considering

the effect of health on retirement plans in samples of older workers and retirees drawn from a Danish panel survey from

1997-2002 merged to longitudinal register data. Using a wide array of alternative health measures, we compare the role

of subjectively versus objectively measured health as a determinant of retirement planning. We control for unobserved

heterogeneity as well as account for endogeneity and measurement error of health in retirement, and estimate separate

models for women as well as men. As in the more studies, justification bias turns out not to be important. Self-rated

physical and mental health are important predictors of retirement planning, in fact more important than economic

factors, both among men as well as women. At a disaggregated level, back problems and myalgia significantly hasten

male retirement, while back problems, osteoporosis and depression are conditions that significantly affect retirement

among women. Retirement planning is in general unaffected by being hospitalised for a serious condition. Looking at

health changes strengthens the conclusion that health is an important factor in retirement planning. In fact, health shocks

seem to increase the propensity to retire earlier. However, health seems to be less important for retirement planning in

Denmark compared to the US.

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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 04-7.

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Length: 56 pages
Date of creation: 27 May 2004
Date of revision:
Handle: RePEc:hhs:aareco:2004_007

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Related research

Keywords: Government Policy; Regulation; Public Health;

Find related papers by JEL classification:
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

This paper has been announced in the following NEP Reports:

• NEP-ALL-2004-06-02 (All new papers)
• NEP-EDU-2004-06-02 (Education)
• NEP-HEA-2004-06-02 (Health Economics)

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This page was last updated on 2009-12-18.