The impact of health on labour supply near retirement

Document type
Working Paper
Blundell, Richard; Britton, Jack; Costa Dias, Monica
Institute for Fiscal Studies
Date of publication
25 August 2017
IFS Working Paper; W17/18
Employment, Health Services, Older Adults
Social welfare
Material type

Download (618KB )

Estimates of the effect of health on employment differ significantly from study to study due to differences in method, data, institutional background and health measure. This report assesses the importance of these differences using a unified framework to interpret and contrast estimates of the impact of health on employment based on various measures of health and estimation procedures. This is done for the US and England. It finds that subjective and objective health measures, as well as subjective measures instrumented by objective measures produce similar estimates if a sufficiently large number of objective measures is used. Reducing the number of objective measures used compromises their ability to capture work capacity and biases estimates downwards. Failure to account for initial conditions leads to an overstatement of the effect of health on employment. This report also finds that a carefully constructed single index of subjective health yields estimates that are very similar to those obtained with multiple measures. Overall, declines in health can explain between 3% and 15% of the decline in employment between ages 50 and 70. These effects are larger among high-school dropouts and tend to drop with education; they are also larger in the US than in England. Finally, cognition has little added explanatory power once we also control for health, suggesting that cognition is not a key driver of employment at these ages.

More from Social welfare collection

Related to Employment

The Work and Health Programme: levelling the playing field

How can the Department of Work and Pensions (DWP) provide a vibrant Health and Work programme whilst balancing the competing demands of cost, quality and risk shift?Drawing on interviews with

Attitudes to health and work amongst the working age population

This report presents findings from a module within the Office of National Statistics Opinion Omnibus Survey that focussed on collecting data on the attitudes of the working-age population towards the

Healthy work: productive workplaces why the UK needs more "good jobs"

This discussion paper brings together the Work Foundation's thinking on the relationship between health, work and productivity. It sets a challenge to government, employers and the unions to rethink

Retirement in flux: changing perceptions of retirement and later life

Retirement is changing. This paper argues that older people should expect to work longer and draw upon property wealth to help fund care costs. Moreover it that argues that society needs to abandon

More items related to this subject

Related to Institute for Fiscal Studies

Investment market volatility: analysis commissioned by TUC

This is a report on investment market volatility commissioned by the TUC

Automatic enrolment in the gig economy: modelling for Zurich

This technical report summarises results from a survey of gig economy workers and examines automatic enrolment policies

21st century leaders: building employability through higher education

Downloadable report looking at what employers think should be done to help prepare students for working life.

The impact of the introduction of automatic enrolment on future generations

This briefing note considers the impact on young workers who may be automatically enrolled on pension schemes for their entire working life

More items related to this publisher