The Impact of Health on Labor Supply near Retirement

Abstract

Estimates of how health affects employment vary considerably. We assess how different methods and health measures impact estimates of the impact of health on employment using a unified framework for the United States and England. We find that subjective and objective health measures and subjective measures instrumented by objective measures produce similar estimates when using sufficiently rich objective measures. Moreover, a single health index can capture the relevant health variation for employment. Health deterioration explains up to 15 percent of the decline in employment between ages 50 and 70. Effects are larger for the United States than England and for the low educated