The Social Costs of Health-related Early Retirement in Germany: Evidence from the German Socio-economic Panel
This study investigates the role of stratification of health and income in the social cost of health-related early retirement, as evidenced in the German Socio-economic Panel (GSOEP). We interpret early retirement as a mechanism to limit work-related declines in health that allows poorer and less healthy workers to maximize the total discounted value of annuities received from Germany’s pay-as-you-go pension system. Investments in new medical technology and better access to existing health services may help to curb the need for early retirement and thus improve efficiency, especially amid population ageing. To value the potential gains, we calibrate an intertemporal model based on ex post predictions from stratified duration regressions for individual retirement timing. We conclude that eliminating the correlation between income and health decline would delay the average age of retirement by approximately half a year, while keeping all workers in the highest of five categories of self assessed health would yield a further delay of up to three years. Had this scenario been realized during our 1992–2005 sample period, we estimate the social costs of early retirement would have been more than 20 percent lower, even without counting the direct social benefits from better health
|Date of creation:||Apr 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Kiellinie 66, D-24105 Kiel|
Phone: +49 431 8814-1
Fax: +49 431 85853
Web page: http://www.ifw-kiel.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eddy van Doorslaer & Xander Koolman, 2004. "Explaining the differences in income-related health inequalities across European countries," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 609-628.
- Herbertsson, Tryggvi Thor & Orszag, Mike, 2003. "The Early Retirement Burden: Assessing the Costs of the Continued Prevalence of Early Retirement in OECD Countries," IZA Discussion Papers 816, Institute for the Study of Labor (IZA).
- Bommier, Antoine & Stecklov, Guy, 2002. "Defining health inequality: why Rawls succeeds where social welfare theory fails," Journal of Health Economics, Elsevier, vol. 21(3), pages 497-513, May.
- Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
- Hostenkamp, Gisela & Stolpe, Michael, 2006. "The health gradient and early retirement: Evidence from the German Socio-economic Panel," Kiel Working Papers 1305, Kiel Institute for the World Economy (IfW).
- Anne C. Case & Angus Deaton, 2003.
"Broken Down by Work and Sex: How Our Health Declines,"
NBER Working Papers
9821, National Bureau of Economic Research, Inc.
- Anne Case & Angus S. Deaton, 2005. "Broken Down by Work and Sex: How Our Health Declines," NBER Chapters, in: Analyses in the Economics of Aging, pages 185-212 National Bureau of Economic Research, Inc.
- Anne Case & Angus Deaton, 2004. "Broken down by work and sex: how our health declines," Working Papers 257, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
- Sikandar Siddiqui, 1997. "The impact of health on retirement behaviour: empirical evidence from West Germany," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 425-438.
- Paul Frijters & John Haisken-DeNew & Michael Shields, 2005.
"Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model,"
CEPR Discussion Papers
496, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model," IZA Discussion Papers 1488, Institute for the Study of Labor (IZA).
- Krupnick, Alan, et al, 2002.
"Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents,"
Journal of Risk and Uncertainty,
Springer, vol. 24(2), pages 161-86, March.
- Krupnick, Alan & Cropper, Maureen & Alberini, Anna & Heintzelman, Martin & Simon, Nathalie & O'Brien, Bernie & Goeree, Ron, 2000. "Age, Health, and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents," Discussion Papers dp-00-37, Resources For the Future.
- Larsen, Mona & Datta Gupta, Nabanita, 2004. "The Impact of Health on Individual Retirement Plans: a Panel Analysis comparing Selfreported versus Diagnostic Measures," Working Papers 04-7, University of Aarhus, Aarhus School of Business, Department of Economics.
- Duangkamon Chotikapanich & John Creedy & Sandra Hopkins, 2003. "Income and Health Concentration in Australia," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 297-305, 09.
- Deaton, Angus S & Paxson, Christina H, 1998.
"Aging and Inequality in Income and Health,"
American Economic Review,
American Economic Association, vol. 88(2), pages 248-53, May.
- Johannesson, Magnus & Johansson, Per-Olov, 1995.
"Quality of Life and the WTP for an Increased Life Expectancy at an Advanced Age,"
SSE/EFI Working Paper Series in Economics and Finance
85, Stockholm School of Economics.
- Johannesson, Magnus & Johansson, Per-Olov, 1997. "Quality of life and the WTP for an increased life expectancy at an advanced age," Journal of Public Economics, Elsevier, vol. 65(2), pages 219-228, August.
- Muurinen, Jaana-Marja & Le Grand, Julian, 1985. "The economic analysis of inequalities in health," Social Science & Medicine, Elsevier, vol. 20(10), pages 1029-1035, January.
When requesting a correction, please mention this item's handle: RePEc:kie:kieliw:1415. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dieter Stribny)
If references are entirely missing, you can add them using this form.