Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individualspecific Effects
Jürgen Maurer () Roger Klein Francis Vella (Mannheim Research Institute for the Economics of Aging (MEA))
Abstract
We use panel data from the US Health and Retirement Study 1992-2002 to estimate the effect of self-assessed health limitations on active labor market participation of men around retirement age. Self-assessments of health and functioning typically introduce an endogeneity bias when studying the effects of health on labor market participation. This results from justification bias, reflecting an individual’s tendency to provide answers which "justify" his labor market activity, and individual-specific heterogeneity in providing subjective evaluations. We address both concerns. We propose a semiparametric binary choice procedure which incorporates potentially 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 and functioning play a major role in the labor market exit decisions of older men.
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Paper provided by Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim in its series MEA discussion paper series with number
08169.
Length: Date of creation: 23 Sep 2008 Date of revision: Handle: RePEc:mea:meawpa:08169
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Find related papers by JEL classification: I10 - Health, Education, and Welfare - - Health - - - General J10 - Labor and Demographic Economics - - Demographic Economics - - - General J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
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