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The Dynamic Effects of Health on the Labor Force Transitions of Older Workers

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  • John Bound
  • Michael Schoenbaum
  • Todd R. Stinebrickner
  • Timothy Waidmann

Abstract

This paper addresses the interplay between health and labor market behavior in the later part of the working life. We use the longitudinal Health and Retirement Survey to analyze the dynamic relationship between health and alternative labor force transitions, including labor force exit, job change and application for disability insurance. Specifically, we examine how the timing of health shocks affects labor force behavior. Controlling for lagged values of health, poor contemporaneous health is strongly associated with labor force exit in general and with application for disability insurance in particular. At the same time, our evidence suggests that controlling for contemporaneous health, poor lagged health is associated with continued participation. Thus, it appears that not just poor health, but declines in health help explain retirement behavior. We conclude that modeling health in a dynamic, longitudinal framework offers important new insights into the effects of poor health on the labor force behavior of older workers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6777.

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Date of creation: Nov 1998
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Publication status: published as Labour Economics, Vol. 6, no. 2 (June 1999): 179-202
Handle: RePEc:nbr:nberwo:6777

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  1. Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, Econometric Society, vol. 62(1), pages 95-116, January.
  2. Geweke, John, 1988. "Antithetic acceleration of Monte Carlo integration in Bayesian inference," Journal of Econometrics, Elsevier, Elsevier, vol. 38(1-2), pages 73-89.
  3. Anderson, Kathryn H. & Burkhauser, Richard V., 1984. "The importance of the measure of health in empirical estimates of the labor supply of older men," Economics Letters, Elsevier, Elsevier, vol. 16(3-4), pages 375-380.
  4. Marjorie Honig & Giora Hanoch, 1985. "Partial Retirement as a Separate Mode of Retirement Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 20(1), pages 21-46.
  5. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
  6. Marjorie Honig, 1985. "Partial Retirement among Women," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 613-621.
  7. Parsons, Donald O, 1982. "The Male Labour Force Participation Decision: Health, Reported Health, and Economic Incentives," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 49(193), pages 81-91, February.
  8. Joseph F. Quinn, 1998. "New Paths to Retirement," Boston College Working Papers in Economics, Boston College Department of Economics 406, Boston College Department of Economics.
  9. Joseph F. Quinn & Richard V. Burkhauser & Daniel A. Myers, 1990. "Passing the Torch: The Influence of Economic Incentives on Work and Retirement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number pt.
  10. Kathryn H. Anderson & Richard V. Burkhauser, 1985. "The Retirement-Health Nexus: A New Measure of an Old Puzzle," Journal of Human Resources, University of Wisconsin Press, vol. 20(3), pages 315-330.
  11. Timothy Waidmann & John Bound & Michael Schoenbaum, 1995. "The Illusion of Failure: Trends in the Self-Reported Health of the U.S. Elderly," NBER Working Papers 5017, National Bureau of Economic Research, Inc.
  12. Keane, Michael P, 1992. "A Note on Identification in the Multinomial Probit Model," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 10(2), pages 193-200, April.
  13. Pakes, Ariel & Griliches, Zvi, 1984. "Estimating Distributed Lags in Short Panels with an Application to the Specification of Depreciation Patterns and Capital Stock Constructs," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 51(2), pages 243-62, April.
  14. Griliches, Zvi, 1974. "Errors in Variables and Other Unobservables," Econometrica, Econometric Society, Econometric Society, vol. 42(6), pages 971-98, November.
  15. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
  16. John Bound & Michael Schoenbaum & Timothy Waidmann, 1996. "Race Differences in Labor Force Attachment and Disability Status," NBER Working Papers 5536, National Bureau of Economic Research, Inc.
  17. 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.
  18. Marjorie Honig & Cordelia Reimers, 1987. "Retirement, Re-entry, and Part-time Work," Eastern Economic Journal, Eastern Economic Association, vol. 13(4), pages 361-371, Oct-Dec.
  19. Kathryn Anderson & Richard V. Burkhauser & Joseph F. Quinn, 1986. "Do retirement dreams come true? The effect of unanticipated events on retirement plans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 518-526, July.
  20. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(4), pages 482-501, October.
  21. Joseph Quinn, 1996. "The Role of Bridge Jobs in the Retirement Patterns of Older Americans in the 1990s," Boston College Working Papers in Economics, Boston College Department of Economics 324., Boston College Department of Economics.
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