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A sequential model of older workers' labor force transitions after a health shock

  • Sergi Jiménez-Mart�n

    (Department of Economics, Universitat Pompeu Fabra, Barcelona, Spain)

  • José M. Labeaga

    (FEDEA and UNED, Madrid, Spain)

  • Cristina Vilaplana Prieto

    (Universidad Católica San Antonio de Murcia, Spain)

In this paper we estimate and validate a three-period sequential model of older workers' labor force transitions following a health|disability shock, using retrospective information from Spanish cross-section data. Central to the analysis are the effects of the various disabilities and their severity. We find that the probability of remaining employed decreases both with age and the severity of the shock. Moreover, we find strong interactions between age and severity for older workers and none for prime-age workers. Suffering any kind of disability reduces the probability of being employed immediately prior to retirement age, and in such cases it is severity which is the strongest indicator. With respect to demographics, we find that female gender, having a retired spouse or being married all reduce the probabilities of both remaining in employment and returning to work following a spell of inactivity; in turn, principal breadwinner status, education and skill levels increase this likelihood. Copyright © 2006 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 9 ()
Pages: 1033-1054

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Handle: RePEc:wly:hlthec:v:15:y:2006:i:9:p:1033-1054
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  1. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
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  8. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
  9. Hugo Benitez-Silva & Moshe Buchinsky & Hiu-Man Chan & John Rust & Sofia Sheivasser, 1997. "An Empirical Analysis of the Social Security Disability Application, Appeal, and Award Process," Public Economics 9712001, EconWPA, revised 16 Feb 1998.
  10. van Ophem, Hans & Schram, Arthur, 1997. "Sequential and Multinomial Logit: A Nested Model," Empirical Economics, Springer, vol. 22(1), pages 131-52.
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  13. Riphahn, Regina T., 1998. "Income and Employment Effects of Health Shocks - A Test Case for the German Welfare State," IZA Discussion Papers 10, Institute for the Study of Labor (IZA).
  14. Diebold, Francis X & Mariano, Roberto S, 1995. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(3), pages 253-63, July.
  15. Emile Tompa, 1999. "Transitions to Retirement: Determinants of Age of Social Security Take Up," Social and Economic Dimensions of an Aging Population Research Papers 6, McMaster University.
  16. Michele Boldrin & Sergi Jimenez-Martni & Franco Peracchi, 1997. "Social Security and Retirement in Spain," NBER Working Papers 6136, National Bureau of Economic Research, Inc.
  17. James J. Heckman & Robert J. Willis, 1975. "A Beta-Logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," NBER Working Papers 0112, National Bureau of Economic Research, Inc.
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