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Inferring the Relationship Between Employment and Disability Status Among Persons Nearing Retirement Age

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  • Kreider, Brent
  • Pepper, John V.

Abstract

Although there is a long-standing interest in the labor market behavior of older persons, there is little consensus on the reliability of self-reported indicators of health status. Rather than imposing the strong assumptions required to obtain point identification, Kreider and Pepper (2001, 2002) take a step back to evaluate what can be inferred under a variety of assumptions that are weaker but arguably more credible than those imposed in the existing literature. In this paper, we review this recent line of research to reevaluate how employment rates among older persons vary with disability status in light of misreporting errors in work capacity. Although these assumptions do not identify the conditional employment rates, nonparametric bounds for these parameters can be obtained. Using data from the Health and Retirement Study, we find strong evidence that models estimated under the assumption of fully accurate reporting lead to biased inferences. In particular, it appears that the nonworkers tend to overreport disabilities.
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Suggested Citation

  • Kreider, Brent & Pepper, John V., 2002. "Inferring the Relationship Between Employment and Disability Status Among Persons Nearing Retirement Age," Staff General Research Papers Archive 12648, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12648
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