The Effect of Health Changes and Long-Term Health on the Work Activity of Older Canadians

38 Pages Posted: 6 Sep 2004

See all articles by Doreen Au

Doreen Au

McMaster University

Thomas F. Crossley

European University Institute - Economics Department (ECO); Institute for Fiscal Studies

Martin Schellhorn

GSF - National Research Center for Environment and Health - Institute of Health Economics and Health Care Management (IGM); IZA Institute of Labor Economics

Date Written: September 2004

Abstract

Using longitudinal data from the Canadian National Population Health Survey (NPHS), we study the relationship between health and employment among older Canadians. We focus on two issues: (1) the possible endogeneity of self-reported health, particularly justification bias, and (2) the relative importance of health changes and long-term health in the decision to work. The NPHS contains the HUI3, an objective health index which has been gaining popularity in empirical work. We contrast estimates of the impact of health on employment using self-assessed health, the HUI3, and a purged health measure similar to that employed by Bound et al. (1999) and Disney et al. (2003). A direct test suggests that self-assessed health suffers from justification bias. However, the HUI3 provides estimates that are similar to the purged health measure. We also corroborate recent U.S. and U.K. findings that changes in health are important in the work decision.

Keywords: health, health changes, employment, older workers

JEL Classification: I12, J26

Suggested Citation

Au, Doreen and Crossley, Thomas F. and Schellhorn, Martin, The Effect of Health Changes and Long-Term Health on the Work Activity of Older Canadians (September 2004). Available at SSRN: https://ssrn.com/abstract=586761 or http://dx.doi.org/10.2139/ssrn.586761

Doreen Au

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Thomas F. Crossley (Contact Author)

European University Institute - Economics Department (ECO) ( email )

Villa San Paolo
Via della Piazzuola 43
50133 Florence
Italy

Institute for Fiscal Studies ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Martin Schellhorn

GSF - National Research Center for Environment and Health - Institute of Health Economics and Health Care Management (IGM) ( email )

Ingolstädter Landstrasse 1
D-85764 Neuherberg
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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