Seminar: What do wages add to the health-employer nexus? Evidence from older European workers

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Adriaan Kalwij (UU)

Discussant: Marloes de Graaf (CPB)

Language: English

Registration: Please register by sending an email to seminars@cpb.nl.

Abstract subject:
We explore the role in the health-employment nexus of the wage rates of older workers by using individual-level panel data from the Survey of Health, Ageing, and Retirement in Europe to estimate a system of equations for health, wages, and employment. We find that men (women) who are in relatively better health (measured by a one-unit or a 0.8 standard deviation increase in a health index) have, on average, a 7 percent higher hourly wage rate, which results (at most) in a 2 (3) percentage points higher employment probability. We also show a direct impact of health on employment: men (women) in relatively better health have an 18 (15) percentage points higher employment probability. As regards differences between European countries, our findings indicate that for virtually all country groups, the mediating role of wages in the health-employment nexus is relatively small while the direct impact of health on employment is relatively large and rather similar. Overall, our findings suggest only a minor role for disability income policies likes wage subsidies to encourage the employment of (older) workers with health limitations, but an instrumental role for policy aimed at helping employers accommodate these workers on the job and keep them employed at older ages.

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