Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s

39 Pages Posted: 12 Jul 2000

See all articles by David M. Blau

David M. Blau

University of North Carolina (UNC) at Chapel Hill - Department of Economics; IZA Institute of Labor Economics

Donna B. Gilleskie

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: February 1997

Abstract

We estimate the impact of employer-provided retiree health insurance on the rate at which men aged 51-62 enter and exit the labor force and switch jobs. The models estimated are an approximation of the employment decision rules implied by a dynamic stochastic model of employment behavior of older individuals. We use data from the Health and Retirement Survey (HRS), which contains more detailed and accurate measures of retiree health insurance than those used in most previous studies. The results show that availability of employer-provided retiree health insurance (EPRHI) increases the rate of exit from employment by two percentage points per year on average if the individual shares the cost of the insurance coverage with the firm, and by six percentage points if the firm pays the entire cost. The impact of EPRHI on the annual rate of labor force exit increases with age, reaching nine percentage points by age 61. These are larger than the effects estimated in previous studies. The accurate and detailed health insurance measures available in the HRS help account for the larger effects found here. Controlling for unobserved heterogeneity, a possibility not accounted for in previous studies, also has a substantial impact on the estimates.

Suggested Citation

Blau, David M. and Gilleskie, Donna B., Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s (February 1997). NBER Working Paper No. w5948, Available at SSRN: https://ssrn.com/abstract=225728

David M. Blau (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Gardner Hall
Chapel Hill, NC 27599
United States
919-966-3962 (Phone)
919-966-4986 (Fax)

IZA Institute of Labor Economics

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

Donna B. Gilleskie

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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