TAILIEUCHUNG - Ceaseless Toil? Health and Labor Supply of the Elderly in Rural China

The presence or absence of diseases is strongly associated with individual health but did not fulfil the multidimensional concept of health. Health is characterised by dynamic and multi-factorial influences on the physical, psychological and social functioning of an individual. On the one hand, an objective health status includes the set of diagnosed physiological and psychological diseases of an individual. By contrast, the subjective health status is indicated by impairments in daily activities, functional limitation and a decline in life quality as consequence of specific diseases. Moreover, the subjective health status is a better predictor of a person’s future medical. | The William Davidson Institute AT THE UNIVERSITY OF MICHIGAN BUSINESS SCHOOL Ceaseless Toil Health and Labor Supply of the Elderly in Rural China By Dwayne Benjamin Loren Brandt and Jia-Zhueng Fan William Davidson Institute Working Paper Number 579 June 2003 Ceaseless Toil Health and Labor Supply of the Elderly in Rural China Dwayne Benjamin Loren Brandt Jia-Zhueng Fan Department of Economics University of Toronto This Draft June 12 2003 Abstract Deborah Davis-Friedmann 1991 described the retirement pattern of the Chinese elderly in the prereform era as ceaseless toil lacking sufficient means of support the elderly had to work their entire lives. In this paper we re-cast the metaphor of ceaseless toil in a labor supply model where we highlight the role of age and deteriorating health. The empirical focus of our paper is 1 Documenting the labor supply patterns of elderly Chinese and 2 Estimating the extent to which failing health drives retirement. We exploit the panel dimension of the 1991-93-97 waves of the China Health and Nutrition Survey confronting a number of econometric issues especially the possible contamination of age by cohort effects and the measurement error of health. In the end it appears that ceaseless toil is also an accurate depiction of elderly Chinese work patterns since economic reform but failing health only plays a small observable role in explaining declining labor supply over the life-cycle. Keywords retirement health and labor supply social security China JEL Classification Numbers J26 J14 P36 This draft has benefited from comments by Mark Stabile participants at the Canadian Health Economics Study Group Halifax NS May 2002 and seminar participants at McGill Guelph Princeton Toronto and UC-Berkeley. Benjamin and Brandt gratefully acknowledge the financial support of the SSHRC. Introduction Industrialization with the shift of workers from farm to factory is a primary impetus for the implementation of public old age security programs. .

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