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Ill-health and transitions to part-time work and self-employment among older workers

Author Info

  • Zucchelli, E.
  • Harris, M.
  • Zhao, X.

Abstract

This paper employs a dynamic multinomial choice framework to provide new evidence on the effect of health on labour market transitions among older individuals. We consider retirement as a multi-state process and examine the effects of ill-health and health shocks on mobility between full-time employment, part-time employment, self-employment and inactivity. In order to disentangle the roles of unobserved individual heterogeneity and true state dependence, we estimate dynamic panel multinomial logit models with random effects, assuming a first order Markov process and accounting for the initial conditions problem. We also account for potential measurement error in the self-assessed health status by building a latent health stock model and employing measures of health shocks. Using data from the first nine waves of the (2001 - 2009) Household, Income and Labour Dynamics in Australia (HILDA) Survey, we find that both ill-health and health shocks greatly increase the probability of leaving full-time employment towards inactivity. We also find evidence of health-driven part-time and selfemployment paths into inactivity.

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Paper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 12/04.

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Date of creation: Feb 2012
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Handle: RePEc:yor:hectdg:12/04
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Keywords: ill-health; health shocks; labour transitions; dynamic multinomial choice models;

Find related papers by JEL classification:

  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
  • I10 - Health, Education, and Welfare - - Health - - - General
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

This paper has been announced in the following NEP Reports:

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Cited by:

  1. Emmanuel Duguet & Christine Le Clainche, 2014. "The Effect of Non-Work Related Health Events on Career Outcomes: An Evaluation in the French Labor Market," Revue d'économie politique, Dalloz, vol. 124(3), pages 437-465.
  2. Charlotte Geay & Grégoire de Lagasnerie & Makram Larguem, 2014. "Evolution of outpatient healthcare expenditure due to ageing in 2030, a dynamic micro-simulation model for France," Sciences Po publications 28, Sciences Po.

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