The health gradient and early retirement: Evidence from the German Socio-economic Panel

Gisela Hostenkamp and Michael Stolpe

No 1305, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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: Retirement behaviour; Duration analysis; Germany; Health gradient (search for similar items in EconPapers)
JEL-codes: H51 H55 I12 J26 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1305

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