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DisclaimerThe views, opinions, findings, and conclusions or recommendations expressed in this presentation are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.
• Literature identifies poor health, financial incentives (disability insurance, pensions), financial security to encourage exit from labour force; continued employment of spouse associated with further participation.
• Enright and Scobie (2010) found health and marital status to be important factors, using first wave of Health, Work and Retirement survey (cross-section).
• Extends current literature by utilising longitudinal data.
• The datasets used are the Health, Work and Retirement (HWR) survey (run by Massey University, funded by Health Research Council).
• Aged 54-70 in baseline survey in 2006, followed up in 2008. • Baseline sample randomly selected from electoral roll, with
oversampling of Maori to combat expected attrition• ...and the first wave of its successor study, the New Zealand
Longitudinal Study of Ageing (NZLSA) run by Massey University, and Enhancing Wellbeing in an Ageing Society (EWAS): a research collaboration between the the Family Centre Social Policy Unit and Waikato University.
• NZLSA is funded by Ministry of Science and Innovation for 2010 and 2012.
• Three wave panel: 2006, 2008 (HWR) and 2010 (NZLSA) of approximately 1,800 New Zealanders surveyed three times on their health, wealth and social well-being.
Demand – mismatch of skills with industry demand, lack of suitably flexible or part-time jobs, unwillingness to re-train or up skill older individuals, age-based discrimination?
Supply – health and disability constraints, care giving responsibilities, leisure preferences, social norms?
• Parameterise this correlation between covariates and unobservables (Mundlak, 1978).
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• The final specification includes terms intended to capture time invariant differences between people (unobserved heterogeneity); as well as a term which captures the effect of changes within individuals over time.
• i.e. Identify direct effect of health through within person variation.• Estimate models separately for males and females.
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2. Results
- Other controls are age, region, ethnicity, other superannuation, benefit receipt, migrant status, attitude toward retirement, log of other household income. - (***) 10% (**) 5% (*) 1%
Participation (base=retired)
Pooled logit Logit with random effects Pooled logit Logit with random effects
• After accounting for unobserved heterogeneity, physical health remains a significant determinant of participation for males, however for females this effect disappears.
- Direct effect of physical health on male labour supply? - Females less likely to be employed in physically demanding
occupations?
• Individual specific heterogeneity explains a substantial proportion of variation.
- Decisions by households and individuals are complex, and influenced by factors unobserved and unreported in a survey.