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Physiological aging and life-cycle labor supply across countries

Author

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  • Casper Worm Hansen
  • Carl-Johan Dalgaard
  • Holger Strulik

Abstract

We construct a cohort-based frailty index for 180 countries over the period 1990-2019. We use this measure of physiological aging to estimate the impact of deteriorating health on labor force participation. Our three-dimensional panel framework, in which the unit of observation is a cohort in a given country at a given age, allows us to control for a range of unobserved factors. Our identification strategy further exploits a compensating law of physiological aging to account for reverse causality. We find a negative effect of physiological aging on labor market participation: an increase of the frailty index by one percent leads to a reduction of labor force participation of about 0.6 (±0.2) percentage points. Since health deficits (in the frailty index) are accumulated at a rate of about 3 percent per year of life, almost all of the age-related decline in labor force participation can be motivated by deteriorating health.

Suggested Citation

  • Casper Worm Hansen & Carl-Johan Dalgaard & Holger Strulik, 2023. "Physiological aging and life-cycle labor supply across countries," PLOS ONE, Public Library of Science, vol. 18(11), pages 1-22, November.
    • Handle: RePEc:plo:pone00:0294952
    DOI: 10.1371/journal.pone.0294952
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