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Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individual-specific Effects

Author

Listed:
  • Jürgen Maurer

    (Institute of Health Economics and Management and Faculty of Business and Economics, University of Lausanne)

  • Roger Klein

    (Rutgers University)

  • Francis Vella

    (Georgetown University)

Abstract

We use panel data from the U.S. Health and Retirement Study, 1992–2002, to estimate the effect of self-assessed health limitations on the active labor market participation of older men. Self-assessments of health are likely to be endogenous to labor supply due to justification bias and individual-specific heterogeneity in subjective evaluations. We address both concerns. We propose a semiparametric binary choice procedure that incorporates nonadditive correlated individual-specific effects. Our estimation strategy identifies and estimates the average partial effects of health and functioning on labor market participation. The results indicate that poor health plays a major role in labor market exit decisions. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Jürgen Maurer & Roger Klein & Francis Vella, 2011. "Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individual-specific Effects," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 764-774, August.
    • Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:764-774
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    Cited by:

    1. Martin Huber & Michael Lechner & Conny Wunsch, 2011. "Does leaving welfare improve health? Evidence for Germany," Health Economics, John Wiley & Sons, Ltd., vol. 20(4), pages 484-504, April.
    2. Fernández-Val, Iván & Savchenko, Yevgeniya & Vella, Francis, 2017. "Evaluating the role of income, state dependence and individual specific heterogeneity in the determination of subjective health assessments," Economics & Human Biology, Elsevier, vol. 25(C), pages 85-98.
    3. Anastasia Semykina, 2018. "Self‐employment among women: Do children matter more than we previously thought?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(3), pages 416-434, April.
    4. Stefanie Schurer, 2008. "Discrete Heterogeneity in the Impact of Health Shocks on Labour Market Outcomes," Melbourne Institute Working Paper Series wp2008n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Wenliang Hou & Alicia H. Munnell & Geoffrey T. Sanzenbacher & Yinji Li, 2017. "Why Are U.S. Households Claiming Social Security Later?," Working Papers, Center for Retirement Research at Boston College wp2017-3, Center for Retirement Research.
    6. Pamela Giustinelli & Matthew D. Shapiro, 2024. "SeaTE: Subjective Ex Ante Treatment Effect of Health on Retirement," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 278-317, April.
    7. Liu, Laura & Poirier, Alexandre & Shiu, Ji-Liang, 2025. "Identification and estimation of partial effects in nonlinear semiparametric panel models," Journal of Econometrics, Elsevier, vol. 252(PB).
    8. Berg Claudia & Emran Shahe & Shilpi Forhad, 2020. "Microfinance and Moneylenders: Long-run Effects of MFIs on Informal Credit Market in Bangladesh," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-35, July.
    9. Kämpfen, Fabrice & Maurer, Jürgen, 2016. "Time to burn (calories)? The impact of retirement on physical activity among mature Americans," Journal of Health Economics, Elsevier, vol. 45(C), pages 91-102.
    10. Andrew E. Clark & Yarine Fawaz, 2015. "Retirement and the Marginal Utility of Income," PSE Working Papers halshs-01189009, HAL.
    11. Daniel Barth, 2018. "The Costs and Beliefs Implied by Direct Stock Ownership," Management Science, INFORMS, vol. 64(11), pages 5263-5288, November.
    12. Emma Gorman & Grant M Scobie & Andy Towers, 2012. "Health and Retirement of Older New Zealanders," Treasury Working Paper Series 12/02, New Zealand Treasury.
    13. Sime Smolic & Ivan Cipin & Petra Medimurec, 2020. "How is health associated with employment during later working life in Croatia?," Public Sector Economics, Institute of Public Finance, vol. 44(1), pages 99-116.
    14. Fernández-Val, Iván & Savchenko, Yevgeniya & Vella, Francis, 2013. "Evaluating the Role of Individual Specific Heterogeneity in the Relationship Between Subjective Health Assessments and Income," IZA Discussion Papers 7651, IZA Network @ LISER.
    15. Anita Tisch, 2015. "Health, work ability and work motivation: determinants of labour market exit among German employees born in 1959 and 1965 [Gesundheit, Arbeitsfähigkeit und Arbeitsmotivation: Beweggründe für den Erwerbsausstieg am Beispiel Erwerbstätiger der Gebur," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 48(3), pages 233-245, October.
    16. Laage, Louise, 2024. "A Correlated Random Coefficient panel model with time-varying endogeneity," Journal of Econometrics, Elsevier, vol. 242(2).

    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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