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Labour Force Participation of the Elderly in Europe: The Importance of Being Healthy

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  • Kalwij, Adriaan

    ()
    (Utrecht School of Economics)

  • Vermeulen, Frederic

    ()
    (Tilburg University)

Abstract

In this paper we study labour force participation behaviour of individuals aged 50-64 in 11 European countries. The data are drawn from the new Survey of Health, Ageing and Retirement in Europe (SHARE). The empirical analysis shows that health is multi-dimensional, in the sense that different health indicators have their own significant impact on individuals' participation decisions. Health effects differ markedly between countries. A counterfactual exercise shows that improved health conditions may yield over 10 percentage points higher participation rates for men in countries like Austria, Germany and Spain, and for females in the Netherlands and Sweden. Moreover, we show that the declining health condition with age accounts considerably for the decline in participation rates with age.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1887.

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Length: 30 pages
Date of creation: Dec 2005
Date of revision:
Publication status: published as: "Health and labour force participation of older people in Europe: what do objective health indicators add to the analysis?" in: Health Economics, 2008, 17(5), 619-638.
Handle: RePEc:iza:izadps:dp1887

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Keywords: health; labour force participation; SHARE; retirement;

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References

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  1. Agar Brugiavini & Tullio Jappelli & Guglielmo Weber, 2002. "The Survey on Health, Aging and Wealth," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 86, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. Rust, J., 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Working papers, Wisconsin Madison - Social Systems 9430, Wisconsin Madison - Social Systems.
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  6. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A Collective Retirement Model: Identification and Estimation in the Presence of Externalities," Discussion Paper, Tilburg University, Center for Economic Research 2004-75, Tilburg University, Center for Economic Research.
  7. Richard Disney & Carl Emmerson & Matthew Wakefield, 2003. "Ill health and retirement in Britain: a panel data based analysis," IFS Working Papers, Institute for Fiscal Studies W03/02, Institute for Fiscal Studies.
  8. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 16(3), pages 595-629, July.
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  11. Kerkhofs, Marcel & Lindeboom, Maarten & Theeuwes, Jules, 1998. "Retirement, financial incentives and health," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0042, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  12. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, Elsevier, vol. 6(2), pages 179-202, June.
  13. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The Social Security Early Entitlement Age in a Structural Model of Retirement and Wealth," NBER Working Papers 9183, National Bureau of Economic Research, Inc.
  14. Didier Blanchet & Thierry Debrand & Paul Dourgnon & Anne Laferrère, 2007. "Health, Ageing and Retirement in Europe," Economie et Statistique, Institut National de la Statistique et des Etudes Economiques, Institut National de la Statistique et des Etudes Economiques, vol. 403, pages 3-18, December.
  15. Richard Blundell & Costas Meghir & Sarah Smith, 2002. "Pension Incentives and the Pattern of Early Retirement," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(478), pages C153-C170, March.
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Cited by:
  1. Van Bui & Michael Stolpe, 2010. "The impact of new drug launches on the loss of labor from disease and injury: evidence from German panel data," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 10(4), pages 315-346, December.
  2. Dekkers, Gijs, 2008. "Are the old poor? A discussion and some cursory evidence," MPRA Paper 29436, University Library of Munich, Germany.
  3. Iuliia Sonina, 2012. "Microanalysis of retirement behavior in the Russian Federation," Post-Print, HAL dumas-00817699, HAL.
  4. Serguey Ivanov, 2009. "Demographic and economic factors of labour supply: Long-term projections and policy options for France, Germany, Italy and the United Kingdom," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 7(1), pages 83-122.
  5. Ajantha, Sisira Kumara & Tharaka, Sameera Senanayaka, 2012. "The Employment Status of the Elderly in Sri Lanka: Patterns and Determinants," MPRA Paper 42977, University Library of Munich, Germany, revised 30 Nov 2012.
  6. Gisela Hostenkamp & Michael Stolpe, 2008. "The Social Costs of Health-related Early Retirement in Germany: Evidence from the German Socio-economic Panel," Kiel Working Papers 1415, Kiel Institute for the World Economy.
  7. Edwin van Gameren, 2008. "Labor Force Participation of Mexican Elderly: The Importance of Health," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 23(1), pages 89-127.

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