Health Shocks and Retirement: The Role of Welfare State Institutions

Nabanita Datta Gupta and Mona Larsen ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the effect of an acute health shock on retirement among elderly male workers in Denmark, 1991-1999, and in particular whether various welfare state programs and institutions impinge on the retirement effect. The results show that an acute health event increases the retirement chances of elderly male workers by 8%, and that this increase in the baseline retirement probability is not affected by eligibility to early exit programs and persists even after accounting for selection due to take-up of disability pension. Neither is it affected by the relatively long duration of sickness benefits in Denmark nor by the promotion of corporate social responsibility initiatives since the mid-1990s. In the late 1990s, however, the retirement rate following a health shock is reduced to 3% with the introduction of the subsidized employment program (fleksjob) but this effect is on the margin of being significant. For the most part, the retirement effect following a health shock seems to be immune to the availability of a multitude of government programs for older workers in Denmark.

Keywords: retirement; health shocks; welfare state programs; medical diagnoses (search for similar items in EconPapers)
JEL-codes: I12 I18 J26 (search for similar items in EconPapers)
Date: 2007-08-10
New Economics Papers: this item is included in nep-age, nep-hea and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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