TY  - JOUR
AU  - Bound,John
AU  - Stinebrickner,Todd
AU  - Waidmann,Timothy
TI  - Health, Economic Resources and the Work Decisions of Older Men
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13657
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13657
L1  - http://www.nber.org/papers/w13657.pdf
N1  - Author contact info:
John Bound
Department of Economics
University of Michigan
Ann Arbor, MI 48109-1220
Tel: 734/998-7149
Fax: 734/998-7415
E-Mail: jbound@umich.edu

Todd R. Stinebrickner
Department of Economics
University of Western Ontario
London, Ontario, N6A 5C2
CANADA
Tel: 519/661-2111
Fax: 519/661-3666
E-Mail: trstineb@uwo.ca

Timothy Waidmann
The Urban Institute
E-Mail: twaidman@ui.urban.org
AB  - In this paper, we specify a dynamic programming model that addresses the interplay among health, financial resources, and the labor market behavior of men in the later part of their working lives.  Unlike previous work which has typically used self reported health or disability status as a proxy for health status, we model health as a latent variable, using self reported disability status as an indicator of this latent construct.  Our model is explicitly designed to account for the possibility that the reporting of disability  may be endogenous to the labor market behavior we are studying.   The model is estimated using data from the Health and Retirement Study.  We compare results based on our model to results based on models that treat health in the typical way, and find large differences in the estimated effect of health on behavior.  While estimates based on our model suggest that health has a large impact on behavior, the estimates suggest a substantially smaller role for health than we find when using standard techniques.  We use our model to simulate the impact on behavior of raising the normal retirement age, eliminating early retirement altogether and eliminating the Social Security Disability Insurance program.
ER  -