IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/295.html
   My bibliography  Save this paper

Health, Cognition and Work Capacity Beyond the Age of 50

Author

Listed:
  • Vandenberghe, Vincent

Abstract

The rising cost of old-age dependency in Europe and elsewhere invariably leads to reforms aimed at raising the effective age or retirement. But do older individuals have the health/cognitive capacity to work longer? Following Cutler et al. (2012), this paper asks how much older individuals could work if they worked as much as their younger (50-54) counterparts in similar health/with equal cognitive performance. Contrary to existing papers, this one uses international, European, comparable panel evidence available in the Survey of Health, Ageing and Retirement in Europe (SHARE). It considers both physical health and cognition; and health consists of subjective and objective measures. Also, it examines the extensive and intensive margins of work (employment and hours): existing papers only consider the former. Results are essentially fivefold. First, declines in health significantly affect employment. Second, the impact on hours is statistical significant but of much smaller magnitude. People suffering from ill health rarely adjust hours; they rather stop working altogether. Third, cognition is not fundamentally affected by ageing, and it adds little to our capacity to predict how work capacity evolves with age. Fourth, identification issues exist and must be addressed. They comprise unobserved heterogeneity across respondents, justification bias or proxying/measurement errors regarding health. Finally, declining health/cognition explain at most 31% of the actual labour supply reduction between 50 and 70. This confirms the existence of a, currently largely underused, work capacity among older individuals.

Suggested Citation

  • Vandenberghe, Vincent, 2019. "Health, Cognition and Work Capacity Beyond the Age of 50," GLO Discussion Paper Series 295, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:295
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/190974/3/GLO-DP-0295.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. V. Vandenberghe, 2017. "The productivity challenge. What to expect from better-quality labour and capital inputs?," Applied Economics, Taylor & Francis Journals, vol. 49(40), pages 4013-4025, August.
    2. Benoit Dostie, 2011. "Wages, Productivity and Aging," De Economist, Springer, vol. 159(2), pages 139-158, June.
    3. Eve Caroli & Andrea Bassanini, 2015. "Is Work bad for Health ? The Role of Constraint Versus Choice," Annals of Economics and Statistics, GENES, issue 119-120, pages 13-37.
    4. Hutchens, Robert, 2010. "Worker characteristics, job characteristics, and opportunities for phased retirement," Labour Economics, Elsevier, vol. 17(6), pages 1010-1021, December.
    5. Michael Baker & Mark Stabile & Catherine Deri, 2004. "What Do Self-Reported, Objective, Measures of Health Measure?," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
    6. Richard Blundell & Jack Britton & Monica Costa Dias & Eric French, 2023. "The Impact of Health on Labor Supply near Retirement," Journal of Human Resources, University of Wisconsin Press, vol. 58(1), pages 282-334.
    7. John Pencavel, 2016. "Whose Preferences Are Revealed In Hours Of Work?," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 9-24, January.
    8. Alain Jousten & Mathieu Lefèbvre & Sergio Perelman & Pierre Pestieau, 2010. "The Effects of Early Retirement on Youth Unemployment: The Case of Belgium," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 47-76, National Bureau of Economic Research, Inc.
    9. repec:dau:papers:123456789/11049 is not listed on IDEAS
    10. Courtney Coile & Kevin Milligan & David A. Wise, 2017. "Health Capacity to Work at Older Ages: Evidence from the United States," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 359-394, National Bureau of Economic Research, Inc.
    11. David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990. "An Aging Society: Opportunity or Challenge?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
    12. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    13. David Neumark & Ian Burn & Patrick Button, 2019. "Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 922-970.
    14. V. Vandenberghe & F. Waltenberg & M. Rigo, 2013. "Ageing and employability. Evidence from Belgian firm-level data," Journal of Productivity Analysis, Springer, vol. 40(1), pages 111-136, August.
    15. Silke Anger & Guido Heineck, 2010. "Cognitive abilities and earnings - first evidence for Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 17(7), pages 699-702.
    16. Alain Jousten & Mathieu Lefebvre, 2017. "Work Capacity and Longer Working Lives in Belgium," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 35-58, National Bureau of Economic Research, Inc.
    17. David Dorn & Alfonso Sousa-Poza, 2010. "'Voluntary' and 'involuntary' early retirement: an international analysis," Applied Economics, Taylor & Francis Journals, vol. 42(4), pages 427-438.
    18. Daron Acemoglu, 2010. "When Does Labor Scarcity Encourage Innovation?," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1037-1078.
    19. Vandenberghe, V., 2013. "Are firms willing to employ a greying and feminizing workforce?," Labour Economics, Elsevier, vol. 22(C), pages 30-46.
    20. Francoise Delmez & Vincent Vandenberghe, 2018. "Long Working Hours Make Us Less Productive but Also Less Costly," LABOUR, CEIS, vol. 32(4), pages 259-287, December.
    21. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 439-457, October.
    22. Vegard Skirbekk, 2004. "Age and Individual Productivity: A Literature Survey," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 2(1), pages 133-154.
    23. repec:hal:pseose:halshs-01247138 is not listed on IDEAS
    24. Jan Ours & Lenny Stoeldraijer, 2011. "Age, Wage and Productivity in Dutch Manufacturing," De Economist, Springer, vol. 159(2), pages 113-137, June.
    25. James Banks & Carl Emmerson & Gemma Tetlow, 2017. "Health Capacity to Work at Older Ages: Evidence from the United Kingdom," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 329-357, National Bureau of Economic Research, Inc.
    26. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, vol. 18(2), pages 173-193, April.
    27. Kadir Atalay & Garry F. Barrett, 2015. "The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 71-87, March.
    28. Chirikos, Thomas N & Nestel, Gilbert, 1985. "Further Evidence on the Economic Effects of Poor Health," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 61-69, February.
    29. Eve Caroli & Andrea Bassanini, 2015. "Is Work bad for Health ? The Role of Constraint Versus Choice," Annals of Economics and Statistics, GENES, issue 119-120, pages 13-37.
    30. Vincent Vandenberghe, 2011. "Firm‐level Evidence on Gender Wage Discrimination in the Belgian Private Economy," LABOUR, CEIS, vol. 25(3), pages 330-349, September.
    31. 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.
    32. Joaquim Oliveira Martins & Frédéric Gonand & Pablo Antolín & Christine de la Maisonneuve & Kwang-Yeol Yoo, 2005. "The Impact of Ageing on Demand, Factor Markets and Growth," OECD Economics Department Working Papers 420, OECD Publishing.
    33. Courtney Coile & Kevin S. Milligan & David A. Wise, 2016. "Health Capacity to Work at Older Ages: Evidence from the U.S," NBER Working Papers 21940, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vincent VANDENBERGHE, 2021. "Health, cognition and work capacity beyond the age of 50: International evidence on the extensive and intensive margins of work," International Labour Review, International Labour Organization, vol. 160(2), pages 271-310, June.
    2. Vincent Vandenberghe, 2021. "Work beyond the age of 50. What role for mental versus physical health?," LABOUR, CEIS, vol. 35(3), pages 311-347, September.
    3. Vincent Vandenberghe, 2020. "The Rather Limited Role Of Mental Ill Health In Driving Work Beyond 50," LIDAM Discussion Papers IRES 2020020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. V. Vandenberghe & F. Waltenberg & M. Rigo, 2013. "Ageing and employability. Evidence from Belgian firm-level data," Journal of Productivity Analysis, Springer, vol. 40(1), pages 111-136, August.
    5. Vandenberghe, V., 2013. "Are firms willing to employ a greying and feminizing workforce?," Labour Economics, Elsevier, vol. 22(C), pages 30-46.
    6. Vandenberghe, Vincent, 2021. "Work Beyond the Age of 50. What Role for Mental v.s. Physical Health?," GLO Discussion Paper Series 796, Global Labor Organization (GLO).
    7. V. Vandenberghe, 2011. "Boosting the Employment Rate of Older Men and Women," De Economist, Springer, vol. 159(2), pages 159-191, June.
    8. Vandenberghe, Vincent, 2021. "Differentiating Retirement Age to Compensate for Career Arduousness," GLO Discussion Paper Series 803, Global Labor Organization (GLO).
    9. Vandenberghe Vincent, 2021. "Differentiating retirement age to compensate for health differences," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-34, May.
    10. Pamela Giustinelli & Matthew D. Shapiro, 2024. "SeaTE: Subjective Ex Ante Treatment Effect of Health on Retirement," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 278-317, April.
    11. V. Vandenberghe, 2017. "The productivity challenge. What to expect from better-quality labour and capital inputs?," Applied Economics, Taylor & Francis Journals, vol. 49(40), pages 4013-4025, August.
    12. Courtney C. Coile, 2015. "Economic Determinants Of Workers’ Retirement Decisions," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 830-853, September.
    13. Pekka Ilmakunnas & Mika Maliranta, 2016. "How does the age structure of worker flows affect firm performance?," Journal of Productivity Analysis, Springer, vol. 46(1), pages 43-62, August.
    14. Даниелян, Владимир, 2016. "Детерминанты Пенсионного Возраста: Обзор Исследований [Determinants of Retirement Age: A Review of Research]," MPRA Paper 73865, University Library of Munich, Germany.
    15. Nabanita Datta Gupta & Mona Larsen, 2010. "The impact of health on individual retirement plans: self‐reported versus diagnostic measures," Health Economics, John Wiley & Sons, Ltd., vol. 19(7), pages 792-813, July.
    16. Michael C. Knaus & Steffen Otterbach, 2019. "Work Hour Mismatch And Job Mobility: Adjustment Channels And Resolution Rates," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 227-242, January.
    17. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez-Martín, 2010. "Disability, capacity for work and the business cycle: an international perspective [Has the boom in incapacity benefit claimant numbers passed its peak?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(63), pages 483-536.
    18. Lixin Cai & Guyonne Kalb, 2004. "Health Status and Labour Force Participation: Evidence from the HILDA Data," Melbourne Institute Working Paper Series wp2004n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    19. Andrea ARIU & Vincent VANDENBERGHE, 2014. "Assessing the role of ageing, feminising and better-educated workforces on TFP growth," LIDAM Discussion Papers IRES 2014017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. Elena Grinza & Stephan Kampelmann & François Rycx, 2020. "L’union fait la force? Evidence for wage discrimination in firms with high diversity," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(2), pages 181-211, June.

    More about this item

    Keywords

    Ageing; Health; Cognition; Labour Supply; Work Capacity;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/glabode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.