Working Paper: NBER ID: w10100
Authors: David M. Blau; Donna B. Gilleskie
Abstract: We model the employment and medical care decisions of older men who face health risk. The budget constraint incorporates detailed characteristics of health insurance as well as Social Security and private pensions. A man whose health insurance is tied to continued employment with his current employer faces the risk of large medical expenditures in the event of an adverse health shock if he retires before becoming eligible for Medicare at age 65. A man whose employer provides retiree health insurance or who has access to other health insurance not tied to his employment decision (e.g., from his wife) can retire before age 65 without consequences for his health insurance coverage. We use data from the Health and Retirement Survey to estimate the parameters of the model using structural methods. Simulations based on the estimates imply that changes in health insurance, including access and restrictions to retiree health insurance and Medicare have a modest impact on employment behavior among older males.
Keywords: retiree health insurance; employment behavior; older men
JEL Codes: J26; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Retiree health insurance (J26) | Employment retention (J63) |
| Absence of retiree health insurance (I13) | Early labor force exit (J26) |
| Retiree health benefits added (J26) | Nonemployment rate of men (J69) |
| Changes in health insurance access (I13) | Employment patterns (J63) |