Working Paper: NBER ID: w2997
Authors: John Bound
Abstract: Labor supply estimates are sensitive to the measures of health used. When self reported measures are used health seems to playa larger role and economic factors a smaller one than when more objective measures are used" While most authors have interpreted these results as an indication of the biases inherent in using self-reported measures, there are reasons to be suspicious of estimates based on more objective measures as well. In this paper I construct a statistical model incorporating both self-reported and objective measures of health. I use the model to show the potential biases involved in using either measure of health or in using one to instrument the other- When outside information on the validity of self-reported measures of health are incorporated into the model estimates suggest that the self-reported measures of health perform better than many have believed.
Keywords: health measures; retirement; labor supply; self-reported health; objective health measures
JEL Codes: J26; I10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| self-reported health measures (I14) | overestimates of health's impact on labor force participation (J22) |
| economic incentives (M52) | biases in self-reported health measures (I10) |
| objective measures (C52) | smaller role of health in labor supply estimates (J29) |
| self-reported health (I10) | endogeneity in estimates of health's impact on labor supply decisions (J29) |
| objective measures (C52) | underestimations of economic variables' impact on labor force participation (J21) |
| mortality information as health proxy (I12) | underestimate effects of health (I12) |
| self-reported and objective measures (C90) | overestimate or underestimate impact of health and economic variables on labor force participation (J21) |