Midlife Health and Later Life Economic Inequality

Health shapes a broad set of later-life outcomes that are central to macroeconomics and public policy, including disability receipt, retirement, long-term care use, and survival. Yet we know little about how much differences in midlife health contribute to disparities in these outcomes later in life by race, ethnicity, and gender. Using the Health and Retirement Study, we construct a measure of health based on frailty and document large disparities at midlife. Black men and women have frailty levels at age 55 comparable to those of White men and women who are 13 and 20 years older, respectively, while the corresponding gaps for Hispanic men and women are 8 and 12 years. We then estimate a dynamic system linking health at age 55 to subsequent outcomes. Equalizing the distribution of health at age 55 across groups substantially reduces disparities in time spent in poor health, disability benefit receipt, and nursing home residence. Importantly, midlife health can account for later-life disparities more than education, health insurance coverage, and marital status jointly.