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The effect of health changes and long-term health on the work activity of older Canadians

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  • Doreen Wing Han Au
  • Thomas F. Crossley
  • Martin Schellhorn

Abstract

Using longitudinal data from the Canadian National Population Health Survey (NPHS), we study the relationship between health and employment among older Canadians. We focus on two issues: (1) the possible problems with self-reported health, including endogeneity and measurement error, and (2) the relative importance of health changes and long-term health in the decision to work. We contrast estimates of the impact of health on employment using self-assessed health, an objective health index contained in the NPHS - the HUI3, and a 'purged' health stock measure. Our results suggest that health has an economically significant effect on employment probabilities for Canadian men and women aged 50-64, and that this effect is underestimated by simple estimates based on self-assessed health. We also corroborate recent US and UK findings that changes in health are important in the work decision. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Doreen Wing Han Au & Thomas F. Crossley & Martin Schellhorn, 2005. "The effect of health changes and long-term health on the work activity of older Canadians," Health Economics, John Wiley & Sons, Ltd., vol. 14(10), pages 999-1018.
  • Handle: RePEc:wly:hlthec:v:14:y:2005:i:10:p:999-1018 DOI: 10.1002/hec.1051
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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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