Health and transitions into nonemployment and early retirement among older workers in Canada

Extending working lives is considered a viable solution to fiscal and macroeconomic challenges related to population ageing. Opportunities for sustained employment, however, are not experienced equally among older population, particularly among those with a health problem. This study aims to examine the longer-term effect of health on employment trajectories in later part of working life using a unique survey-administrative linked dataset for Canada. Specifically, we apply competing-risks models to analyze whether different aspects of health conditions at baseline predict subsequent exit routes, including nonemployment and early retirement. The nonparametric findings of the paper show that only about 33% of workers aged 50–62 with a health problem at baseline remained employed at age 64, compared to 55% of healthy workers. Exiting into nonemployment seemed more common among leavers with activity limitations, while early retirement was more likely among healthy leavers. These results are robust even when individuals’ preferences for work and financial factors were controlled for. Moreover, we identify differential impacts of specific chronic diseases on early work exit. Not all symptoms affect employment transitions to a similar extent. Older workers who reported the comorbidity of mental and musculoskeletal disorders faced an increased risk of nonemployment, while the presence of diabetes and cardiovascular problems at baseline were more predictive of early retirement.