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We examine the role of ill-health in retirement decisions in Britain, using the first eight waves of the British Household Panel Survey (1991-98). As self-reported health status is likely to be endogenous to the retirement decision, we instrument self-reported health by a constructed Ѩealth stock' measure using a set of health indicator variables and personal characteristics, as suggested by Bound et al (1999). Using both linear and non-linear fixed effects estimators, we show that adverse individual health shocks are an important predictor of individual retirement behaviour. We compare the impact of our constructed health measure on economic activity with that arising from the use of other health variables in the data set. We also examine the impact of the 1995 reform of disability benefits on the retirement decision.
Authors
Deputy Director
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
Research Associate University of Bologna
Matthew is Associate Professor at the University of Bologna focusing on consumption and savings choices and how policy affects them.
Research Associate University of Sussex
Richard is an IFS Research Associate, a Part-time Professor of Economics at the University of Sussex and a Visiting Professor of Economics at UCL.
Working Paper details
- DOI
- 10.1920/wp.ifs.2003.0302
- Publisher
- IFS
Suggested citation
R, Disney and C, Emmerson and M, Wakefield. (2003). Ill health and retirement in Britain: a panel data based analysis. London: IFS. Available at: https://ifs.org.uk/publications/ill-health-and-retirement-britain-panel-data-based-analysis (accessed: 20 May 2024).
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