TAILIEUCHUNG - Health, Economic Resources and the Work Decisions of Older Men

Because competition can improve quality and drive down costs, governments should foster com- petition and diversity in the supply of health ser- vices and inputs, particularly drugs, supplies, and equipment. This could include, where feasible, private supply of health care services paid for by governments or social insurance. There is also con- siderable scope for improving the quality and effi- ciency of government health services through a combination of decentralization, performance- based incentives for managers and clinicians, and related training and development of management systems. Exposing the public sector to competition with private suppliers can help to spur such im- provements. Strong government regulation is also. | Health Economic Resources and the Work Decisions of Older Men John Bound University of Michigan and NBER Todd Stinebrickner University of Western Ontario Timothy Waidmann Urban Institute May 2003 Acknowledgements Financial support was provided by the National Institute on Aging R01 AG17579-01 . The project was made computationally feasible by our access to the supercomputer resources of SHARCNET at the University of Western Ontario which were developed with funding from the Canadian Foundation for Innovation and the Ontario Research and Development Challenge Fund. Stinebrickner has also benefitted from a time-release supported under the SHARCNET fellowship progam. We have benefitted from the comments of seminar participants at the University of Michigan and especially Chris Swann and Steve Haider. Abstract In this paper we specify a dynamic programming model that addresses the interplay among health financial resources and the labor market behavior of men in the later part of their working lives. The model is estimated using data from the Health and Retirement Study. Simulations indicate that both health and economic resources play an important role in determining labor supply decisions of older workers and that obtaining a full understanding of the effects of these variables requires that one consider the manner in which they interact. Section 1. Introduction With an aging population on the one hand and difficulties in financing public and private pensions on the other understanding the determinants of individuals retirement behavior is of considerable research and policy importance. Much of the research on the labor force behavior of older working aged adults has focused on the effects of financial incentives such as Social Security and private pensions generally showing that these incentives have powerful behavioral effects. At the same time econometric studies of retirement behavior have provided strong evidence for the importance of health factors .

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