The growing American health penalty: International trends in the employment of older workers with poor health

Abstract

Many countries have reduced the generosity of sickness and disability programs while making them more activating – yet few studies have examined how employment rates have subsequently changed. We present estimates of how employment rates of older workers with poor health in 13 high-income countries changed 2004–7 to 2012–15 using HRS/SHARE/ELSA data. We find that those in poor health in the USA have experienced a unique deterioration: they have not only seen a widening gap to the employment rates of those with good health, but their employment rates fell per se. We find only for Sweden (and possibly England) signs that the health employment gap shrank, with rising employment but stable gaps elsewhere. We then examine possible explanations for the development in the USA: we find no evidence it links to labor market trends, but possible links to the USA's lack of disability benefit reform and wider economic trends.