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Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s

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  • David M. Blau
  • Donna B. Gilleskie

Abstract

We estimate the impact of employer-provided retiree health insurance on the rate at which men aged 51-62 enter and exit the labor force and switch jobs. The models estimated are an approximation of the employment decision rules implied by a dynamic stochastic model of employment behavior of older individuals. We use data from the Health and Retirement Survey (HRS), which contains more detailed and accurate measures of retiree health insurance than those used in most previous studies. The results show that availability of employer-provided retiree health insurance (EPRHI) increases the rate of exit from employment by two percentage points per year on average if the individual shares the cost of the insurance coverage with the firm, and by six percentage points if the firm pays the entire cost. The impact of EPRHI on the annual rate of labor force exit increases with age, reaching nine percentage points by age 61. These are larger than the effects estimated in previous studies. The accurate and detailed health insurance measures available in the HRS help account for the larger effects found here. Controlling for unobserved heterogeneity, a possibility not accounted for in previous studies, also has a substantial impact on the estimates.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5948.

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Date of creation: Feb 1997
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Publication status: published as Blau, David M. and Donna B. Gilleskie. "Retiree Health Insurance And The Labor Force Behavior Of Older Men In The 1990s," Review of Economics and Statistics, 2001, v83(1,Feb), 64-80.
Handle: RePEc:nbr:nberwo:5948

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  1. Alan Krueger & Jorn-Steffen Pischke, 1989. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Working Papers 635, Princeton University, Department of Economics, Industrial Relations Section..
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Cited by:
  1. John Bound & Todd Stinebrickner & Timothy Waidmann, 2007. "Health, Economic Resources and the Work Decisions of Older Men," University of Western Ontario, Economic Policy Research Institute Working Papers 20076, University of Western Ontario, Economic Policy Research Institute.
  2. Stephen DeLoach & Jennifer Platania, 2013. "The Macroeconomic Consequences of Financing Health Insurance," International Advances in Economic Research, Springer, vol. 19(2), pages 107-129, May.
  3. Steven Nyce & Sylvester Schieber & John B. Shoven & Sita Slavov & David A. Wise, 2011. "Does Retiree Health Insurance Encourage Early Retirement?," NBER Working Papers 17703, National Bureau of Economic Research, Inc.
  4. Joseph F. Quinn, 1999. "The Labour Market, Retirement, and Disability," Boston College Working Papers in Economics 420, Boston College Department of Economics.
  5. Chen Song & Louis Nguyen, 2003. "The Effect of Hernias on the Labor Force Participation of Union Army Veterans," NBER Chapters, in: Health and Labor Force Participation over the Life Cycle: Evidence from the Past, pages 253-310 National Bureau of Economic Research, Inc.
  6. Jones, Andrew M. & Rice, Nigel & Roberts, Jennifer, 2010. "Sick of work or too sick to work? Evidence on self-reported health shocks and early retirement from the BHPS," Economic Modelling, Elsevier, vol. 27(4), pages 866-880, July.
  7. Bigsten, A. & Collier, P. & Dercon, S., 2000. "Exports and Firm-Level Efficiency in African Manufacturing," Papers 2000-04, Ecole des Hautes Etudes Commerciales de Montreal-.

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