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IZA
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Health and Work of the Elderly: Subjective Health Measures, Reporting Errors and the Endogenous Relationship between Health and Work
by
Maarten Lindeboom, Marcel Kerkhofs
(March 2002)
published as: 'Health and work of the elderly: subjective health measures, reporting errors and endogeneity in the relationship between health and work' in: Journal of Applied Econometrics, 2009, 24 (6), 1024 - 1046
Abstract:
This paper aims to explore the interrelation between health and work decisions of elderly
workers, taking the various ways in which health and work can influence each other explicitly
into account. For this, two issues are of relevance. Self-assessed health measures are
usually at hand in empirical analyses and research indicates that these may be endogenous,
state dependent, reporting behaviour. Furthermore, even if an objective health measure is
used, it is not likely to be strictly exogenous to labour market status or labour income. Health
and labour market variables are correlated because of unobserved individual-specific
characteristics (e.g., investments in human capital and health capital) Moreover, one’s labour
market status is expected to have a (reverse) causal effect on health. A solution to the
‘Health and Retirement Nexus’ requires an integrated model for work decisions, health
production and health reporting mechanisms. We formulate such a model and estimate it on
a longitudinal dataset of Dutch elderly.
Text: See Discussion Paper No. 457
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