Abstract
This paper provides new cross-country evidence on ‘healthy aging’, whereby populations age in better health over time, and its role in extending working lives. Using microdata surveys that focus on older-age populations in 41 countries during 2000-22, we examine the determinants of old-age health, assess evidence of healthy aging as life expectancy increases, and evaluate its implications for labor market outcomes, such as labor supply and earnings. Our analysis incorporates multiple health dimensions —considering a variety of physical, cognitive, and mental health indicators—and employs different methodological approaches to address endogeneity concerns: (i) instrumental variable (IV) estimation where we proxy exogenous variations in health with the development of chronic diseases that are orthogonal to individuals’ socio-economic characteristics and health behaviors, and (ii) a propensity score reweighting strategy using the AIPW estimator. Our findings show that (i) the various health measures are highly correlated with different socio-economic characteristics, (ii) health outcomes of old-age populations have improved over time, providing evidence in favor of a broad-based ‘healthy aging’ phenomenon, and (iii) these health gains have significantly raised labor earnings, labor productivity, and labor supply (across both extensive and intensive margins). Taken altogether, our results suggest that healthy aging can generate sizeable and significant labor markets impacts for the old-age population.
Presenters
Andresa LagerborgEconomist, Research Department, International Monetary Fund, District of Columbia, United States
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
Economic and Demographic Perspectives on Aging
KEYWORDS
Population Aging, Demographics, Labor Supply, Labor Productivity, Retirement Age
