Kiel Working Papers, Kiel Institute for World Economics
Gisela Hostenkamp and Michael Stolpe
The Health Gradient and Early Retirement: Evidence from the German Socio-economic Panel
Abstract: This paper examines the role of the health gradient
the positive correlation between household income and health – in
individual retirement behavior, using data from the German Socio-economic
Panel (GSOEP). We first estimate agegroup-specific health gradients and
find their slope increases with age, but declines among retired workers. We
then estimate a variety of parametric and semi-parametric duration models
and find that workers’ position relative to the agegroup-specific health
gradient has about the same explanatory power as self-assessed health and
income together. We argue our method promises better predictions of the
long-term impact of policies affecting the health gradient on workers'
timing of retirement amid population aging. Our findings also underline the
importance of imperfect medical technology in reconciling the human capital
theory of health demand with the observation of more rapid declines in
health among less educated workers.
Keywords: Health gradient; Retirement behaviour; Duration analysis; Germany; (follow links to similar papers)
JEL-Codes: H51,; H55,; I12,; J26; (follow links to similar papers)
44 pages, December 2006
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