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Key Findings Details

The Dynamic Effects of Health on the Employment of Older Workers
Richard Blundell, Jack Britton, Monica Costa Dias and Eric French
WP 2016-348

  • The dynamic properties of health are well described by the sum of a highly persistent AR(1) component, plus a transitory component.
  • Transitory health shocks have little impact on employment.
  • Permanent health shocks have much bigger effects on employment.
  • Employment is highly persistent. Lagged employment strongly predicts current employment, even after accounting for the persistence in health.
  • Model estimates suggest a larger impact of health on employment than what OLS estimates imply.