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The Effect of Health Changes and Long-term Health on the Work Activity of Older Canadians

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

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 endogeneity of self- reported health, particularly "justification bias", and (2) the relative importance of health changes and long-term health in the decision to work. The NPHS contains the HUI3, an "objective" health index which has been gaining popularity in empirical work. We contrast estimates of the impact of health on employment using self-assessed health, the HUI3, and a "purged" health measure similar to that employed by Bound et al. (1999) and Disney et al. (2003). A direct test suggests that self-assessed health suffers from justification bias. However, the HUI3 provides estimates that are similar to the "purged" health measure. We also corroborate recent U.S. and U.K. findings that changes in health are important in the work decision.

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Paper provided by McMaster University in its series Social and Economic Dimensions of an Aging Population Research Papers with number 119.

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Length: 46 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:mcm:sedapp:119
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  1. Kerkhofs, Marcel & Lindeboom, Maarten & Theeuwes, Jules, 1999. "Retirement, financial incentives and health," Labour Economics, Elsevier, vol. 6(2), pages 203-227, June.
  2. repec:dgr:uvatin:20020025 is not listed on IDEAS
  3. Michael Baker & Jonathan Gruber & Kevin Milligan, 2003. "The retirement incentive effects of Canada's Income Security programs," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 261-290, May.
  4. Campolieti, Michele, 2002. "Disability and the labor force participation of older men in Canada," Labour Economics, Elsevier, vol. 9(3), pages 405-432, July.
  5. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, December.
  6. Debra Sabatini Dwyer & Olivia S. Mitchell, 1998. "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," NBER Working Papers 6503, National Bureau of Economic Research, Inc.
  7. Hugo Benitez-Silva & Moshe Buchinsky & Hiu Man Chan & Sofia Cheidvasser & John Rust, 2000. "How Large is the Bias is Self-Reported Disability?," NBER Working Papers 7526, National Bureau of Economic Research, Inc.
  8. Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
  9. 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.
  10. repec:ner:tilbur:urn:nbn:nl:ui:12-153280 is not listed on IDEAS
  11. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
  12. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
  13. Brent Kreider, 1999. "Latent Work Disability and Reporting Bias," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 734-769.
  14. Jonathan Gruber, 1997. "Social Security and Retirement in Canada," NBER Working Papers 6308, National Bureau of Economic Research, Inc.
  15. 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.
  16. Richard Disney & Carl Emmerson & Matthew Wakefield, 2003. "Ill health and retirement in Britain: a panel data based analysis," IFS Working Papers W03/02, Institute for Fiscal Studies.
  17. Maki, Dennis R, 1993. "The Economic Implications of Disability Insurance in Canada," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages S148-69, January.
  18. Verbeek, M. & Nijman, T., 1990. "Testing For Selectivity Bias In Panel Data Models," Papers 9018, Tilburg - Center for Economic Research.
  19. Kreider, Brent & Pepper, John V., 2007. "Disability and Employment: Reevaluating the Evidence in Light of Reporting Errors," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 432-441, June.
  20. Jon A. Breslaw & Morton Stelcner, 1987. "The Effect of Health on the Labor Force Behavior of Elderly Men in Canada," Journal of Human Resources, University of Wisconsin Press, vol. 22(4), pages 490-517.
  21. Michael Baker & Mark Stabile & Catherine Deri, 2001. "What do Self-Reported, Objective, Measures of Health Measure?," NBER Working Papers 8419, National Bureau of Economic Research, Inc.
  22. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  23. Doorslaer, Eddy van & Jones, Andrew M., 2003. "Inequalities in self-reported health: validation of a new approach to measurement," Journal of Health Economics, Elsevier, vol. 22(1), pages 61-87, January.
  24. Kathleen McGarry, 2002. "Health and Retirement: Do Changes in Health Affect Retirement Expectations?," NBER Working Papers 9317, National Bureau of Economic Research, Inc.
  25. Baker, Michael & Benjamin, Dwayne, 1999. "Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 724-56, October.
  26. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
  27. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Other publications TiSEM 7ec34a6c-1d84-4052-971c-d, Tilburg University, School of Economics and Management.
  28. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
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