Labor Market Status and Transitions During the Pre-Retirement Years: Learning from International Differences

49 Pages Posted: 10 Nov 2007

See all articles by Arie Kapteyn

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics

James P. Smith

RAND Corporation; IZA Institute of Labor Economics

Arthur van Soest

Tilburg University; Netspar; RAND Corporation; Institute for the Study of Labor (IZA)

James W. Banks

Institute for Fiscal Studies; University of Manchester

Multiple version iconThere are 2 versions of this paper

Date Written: November 2007

Abstract

Many western industrialized countries face strong budgetary pressures due to the aging of the baby boom generations and the general trends toward earlier ages of retirement. The authors use the American PSID and the European Community Household Panel (ECHP) to explain differences in prevalence and dynamics of self-reported work disability and labor force status. To that end they specify a two-equation dynamic panel data model describing the dynamics of labor force status and self-reported work disability. When they apply the U.S. parameters to the equations for the thirteen European countries we consider, the result is generally that work disability is lower and employment is higher. Furthermore, measures of employment protection across the different countries suggest that increased employment protection reduces reentry into the labor force and hence is a major factor explaining employment differences in the pre-retirement years.

Keywords: disability, employment policies, cross-national comparisons, labor force dynamics

JEL Classification: H3, J6, J2

Suggested Citation

Kapteyn, Arie and Smith, James P. and van Soest, Arthur H. O. and Banks, James W., Labor Market Status and Transitions During the Pre-Retirement Years: Learning from International Differences (November 2007). RAND Labor and Population Working Paper No. 536 ; Michigan Retirement Research Center Research Paper No. WP 2007-149. Available at SSRN: https://ssrn.com/abstract=1028889 or http://dx.doi.org/10.2139/ssrn.1028889

Arie Kapteyn (Contact Author)

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
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IZA Institute of Labor Economics

P.O. Box 7240
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Germany

James P. Smith

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

IZA Institute of Labor Economics ( email )

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

Arthur H. O. van Soest

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

Institute for the Study of Labor (IZA)

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

James W. Banks

Institute for Fiscal Studies ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

University of Manchester

Oxford Road
Manchester, M13 9PL
United Kingdom

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