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An Analysis of the Health and Retirement Status of the Elderly

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  • Sickles, Robin C
  • Taubman, Paul

Abstract

in this paper we specify and estimate a structural limited dependent variable model with which we study both the health and retirement status of the elderly. Standard linear estimators, which assume that these variable sare continuous, are not appropriate and categorical estimation techniques are preferred. Our model differs from previous work in that we have longitudinal data and random effects that are correlated over time for different individuals. The problem is made more complicated because there is sample truncation, which could potentially bias coefficient estimates, since approximately twenty percent of the individuals in our sample die. We outline the full information maximum likelihood estimator for such a model and implement it in our empirical analysis. With our structural estimates we analyze, among other things, the degree to which endogeneously determined health status affects the probability of retirement and how changes in social security benefits and eligibility for transfer payments modify both healthiness and the demand for leisure.
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Suggested Citation

  • Sickles, Robin C & Taubman, Paul, 1986. "An Analysis of the Health and Retirement Status of the Elderly," Econometrica, Econometric Society, vol. 54(6), pages 1339-1356, November.
  • Handle: RePEc:ecm:emetrp:v:54:y:1986:i:6:p:1339-56
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    References listed on IDEAS

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    1. Lawrence H. Summers, 1983. "Observations on the Indexation of Old Age Pensions," NBER Chapters,in: Financial Aspects of the United States Pension System, pages 231-258 National Bureau of Economic Research, Inc.
    2. repec:aph:ajpbhl:1983:73:7:779-783_8 is not listed on IDEAS
    3. Lee, Lung-Fei, 1982. "Health and Wage: A Simultaneous Equation Model with Multiple Discrete Indicators," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 199-221, February.
    4. Paul J. Taubman & Robin C. Sickles, 1983. "Supplemental Social Insurance and the Health of the Poor," NBER Working Papers 1062, National Bureau of Economic Research, Inc.
    5. Mitchell, Olivia S & Fields, Gary S, 1984. "The Economics of Retirement Behavior," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 84-105, January.
    6. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    7. Hanoch, Giora & Honig, Marjorie, 1983. "Retirement, Wages, and Labor Supply of the Elderly," Journal of Labor Economics, University of Chicago Press, vol. 1(2), pages 131-151, April.
    8. Fields, Gary S. & Mitchell, Olivia S., 1984. "The effects of social security reforms on retirement ages and retirement incomes," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 143-159, November.
    9. Gourieroux, C & Laffont, J J & Monfort, A, 1980. "Coherency Conditions in Simultaneous Linear Equation Models with Endogenous Switching Regimes," Econometrica, Econometric Society, vol. 48(3), pages 675-695, April.
    10. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    11. Mallar, Charles D, 1977. "The Estimation of Simultaneous Probability Models," Econometrica, Econometric Society, vol. 45(7), pages 1717-1722, October.
    12. Boskin, Michael J, 1977. "Social Security and Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 15(1), pages 1-25, January.
    13. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-764, May.
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