Department of Economics and Business Economics

The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior

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The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior. / Christensen, Bent Jesper; Kallestrup-Lamb, Malene.

In: Health Economics, Vol. 21, No. S1, 2012, p. 56-100.

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@article{7fc73f828fcd42ee80b38764ec0b1216,
title = "The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior",
abstract = "The justification bias in the estimated impact of health shocks on retirement is mitigated by using objective health measures from a large, register-based longitudinal data set including medical diagnosis codes, along with labor market status, financial, and socio-economic variables. The duration until retirement is modeled using single and competing risk specifications, observed and unobserved heterogeneity, and flexible baseline hazards. Wealth is used as a proxy for elapsed duration to mitigate the potential selection bias stemming from conditioning on initial participation. The competing risk specification distinguishes complete multi-period routes to retirement, such as unemployment followed by early retirement. A result on comparison of coefficients across all states is offered. The empirical results indicate a strong impact of health changes on retirement, and hence a large potential for public policy measures intended to retain older workers longer in the labor force. Disability responds more to health shocks than early retirement, especially to diseases of the circulatory, respiratory, and musculoskeletal systems, as well as mental and behavioral disorders. Some unemployment spells followed by early retirement appear voluntary, and spurred by life style diseases.",
keywords = "Competing risks, Duration analysis, Grouped data, Justification bias, Objective medical diagnosis codes, Retirement, Unobserved heterogeneity",
author = "Christensen, {Bent Jesper} and Malene Kallestrup-Lamb",
year = "2012",
language = "English",
volume = "21",
pages = "56--100",
journal = "Health Economics",
issn = "1057-9230",
publisher = "JohnWiley & Sons Ltd.",
number = "S1",

}

RIS

TY - JOUR

T1 - The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior

AU - Christensen, Bent Jesper

AU - Kallestrup-Lamb, Malene

PY - 2012

Y1 - 2012

N2 - The justification bias in the estimated impact of health shocks on retirement is mitigated by using objective health measures from a large, register-based longitudinal data set including medical diagnosis codes, along with labor market status, financial, and socio-economic variables. The duration until retirement is modeled using single and competing risk specifications, observed and unobserved heterogeneity, and flexible baseline hazards. Wealth is used as a proxy for elapsed duration to mitigate the potential selection bias stemming from conditioning on initial participation. The competing risk specification distinguishes complete multi-period routes to retirement, such as unemployment followed by early retirement. A result on comparison of coefficients across all states is offered. The empirical results indicate a strong impact of health changes on retirement, and hence a large potential for public policy measures intended to retain older workers longer in the labor force. Disability responds more to health shocks than early retirement, especially to diseases of the circulatory, respiratory, and musculoskeletal systems, as well as mental and behavioral disorders. Some unemployment spells followed by early retirement appear voluntary, and spurred by life style diseases.

AB - The justification bias in the estimated impact of health shocks on retirement is mitigated by using objective health measures from a large, register-based longitudinal data set including medical diagnosis codes, along with labor market status, financial, and socio-economic variables. The duration until retirement is modeled using single and competing risk specifications, observed and unobserved heterogeneity, and flexible baseline hazards. Wealth is used as a proxy for elapsed duration to mitigate the potential selection bias stemming from conditioning on initial participation. The competing risk specification distinguishes complete multi-period routes to retirement, such as unemployment followed by early retirement. A result on comparison of coefficients across all states is offered. The empirical results indicate a strong impact of health changes on retirement, and hence a large potential for public policy measures intended to retain older workers longer in the labor force. Disability responds more to health shocks than early retirement, especially to diseases of the circulatory, respiratory, and musculoskeletal systems, as well as mental and behavioral disorders. Some unemployment spells followed by early retirement appear voluntary, and spurred by life style diseases.

KW - Competing risks, Duration analysis, Grouped data, Justification bias, Objective medical diagnosis codes, Retirement, Unobserved heterogeneity

M3 - Journal article

VL - 21

SP - 56

EP - 100

JO - Health Economics

JF - Health Economics

SN - 1057-9230

IS - S1

ER -