Labor Market Status and Transitions During the Pre-retirement Years: Learning from International Differences
National Bureau of Economic Research, 2007 - Labor market - 47 pages
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. We 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 we specify a two-equation dynamic panel data model describing the dynamics of labor force status and self-reported work disability. When we 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.
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03 Belgium adopting U.S. Austria Borsch-Supan Burkhauser Community Household Panel contributions correlation Countries Transition Countries Denmark disability and labor disability benefits disability equation disability insurance disability parameters disability pension disability programs disability status Disabled Disabled dynamics of labor earning capacity ECHP Economics effects of lagged employment protection measure employment rate European Community Household Eurostat Finland force dynamics fraction France Germany Greece hjom incentives and institutions individual effects initial conditions Ireland Italy Kapteyn labor force status labor market dynamics labor market institutions lagged employment light blue line loss of earnings n3 sp Netherlands OECD OECD countries paIqesip panel data parameter estimates Peracchi Portugal pre-retirement PS1D PSID RAND Corporation replacement rate self-reported disability self-reported work disability sjaiaujeied sn sip n3 Sn sjaiawejed Soest Spain subscriptions Sweden Table A8 Transition Countries Transition transition rates U.S. coefficients U.S. parameters variation across countries wave Women Transition Countries workers yellow line