Endogenous Health Groups and Heterogeneous Dynamics of the Elderly

Dante Amengual, Jesus Bueren and Julio Crego
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Jesus Bueren: European University Institute
Julio Crego: Tilburg University

No 332, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: We propose a novel methodology to classify individuals into groups of health and characterize their transition across these groups as they age. We use MCMC techniques to estimate a panel Markov switching model that exploits information from both the crosssectional and time series dimensions. Using the Health and Retirement Study, we identify four clearly differentiated and persistent health groups, depending on individual’s physical and mental disabilities, with heterogeneous transitions across gender and education. Our classification outperforms existing measures of health used in the literature at explaining entry in nursing homes, home health care, out-of-pocket medical expenses and mortality.

Date: 2019
New Economics Papers: this item is included in nep-age and nep-hea
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:332

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