Health and Work At Older Ages: Using Mortality To Assess Employment Capacity Across Countries

Kevin S. Milligan, David A. Wise

NBER Working Paper No. 18229
Issued in July 2012
NBER Program(s):   AG

While longevity increased substantially over the last 50 years and health at older ages has improved, labor force participation at older ages has declined. We use mortality rates as a marker for the “health capacity” to work at older ages in 12 OECD countries. Mortality rates can be compared across countries and over time within the same country. For a given level of mortality, we find employment rates of older men vary substantially through time and across countries. At each mortality rate in 2007, if men in France worked as much as men in the United States, they would work 4.6 years more over ages 55 to 69 than they actually did. Comparing the work and mortality of American men in 2007 to the base year of 1977, the same calculation yields 3.7 years more work. These findings suggest a large increase in the health capacity to work, as measured by mortality. The relationship between cross-country mortality and changes in work over time at older ages is weak, suggesting the take-up of this extra capacity to work has varied. However, the dispersion in employment given mortality is strongly influenced by the retirement incentives inherent in public pension programs.

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