Subjective Health Assessments and Active Labor Market Participation of Older Men : Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individualspecific Effects

Maurer, Jürgen ; Klein, Roger ; Vella, Francis

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URL:	https://ub-madoc.bib.uni-mannheim.de/2081
URN:	urn:nbn:de:bsz:180-madoc-20810
Dokumenttyp:	Arbeitspapier
Erscheinungsjahr:	2008
Titel einer Zeitschrift oder einer Reihe:	MEA Discussion Papers
Band/Volume:	169
Ort der Veröffentlichung:	Mannheim
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Rechtswissenschaft und Volkswirtschaftslehre > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC-Schriftenreihe:	Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Fachgebiet:	330 Wirtschaft
Fachklassifikation:	JEL: C30 C14 J26 J10 I10 ,
Normierte Schlagwörter (SWD):	Gesundheit , Ruhestand , Älterer Mann
Abstract:	We use panel data from the US Health and Retirement Study 1992-2002 to estimate the effect of self-assessed health limitations on active labor market participation of men around retirement age. Self-assessments of health and functioning typically introduce an endogeneity bias when studying the effects of health on labor market participation. This results from justification bias, reflecting an individual’s tendency to provide answers which "justify" his labor market activity, and individual-specific heterogeneity in providing subjective evaluations. We address both concerns. We propose a semiparametric binary choice procedure which incorporates potentially nonadditive correlated individual-specific effects. Our estimation strategy identifies and estimates the average partial effects of health and functioning on labor market participation. The results indicate that poor health and functioning play a major role in the labor market exit decisions of older men.