This project will use data from the first three waves of the Health and Retirement Survey (HRS) to estimate a dynamic, structural model of the employment and health care demand decisions of older individuals and couples. The main purpose of the study is to analyze the impact of health insurance on the timing of retirement from the career job. This will be the first study of the effect of health insurance on retirement to use data that contain detailed characteristics of the health insurance coverage available to a given individual while employed and, for the same individual, after retirement. The employment effects of health insurance reform are of considerable interest because of the possibility that decoupling employment and health insurance could lead to a substantial further increase in the already high rate of labor force exit before age 65. A second goal of the study is to estimate the effect of health on the timing of retirement using a multidimensional measure of health. Most studies of the effect of health on retirement use simple discrete indicators of health such as the presence of a disability that limits an individual's ability to work. The HRS data contain a rich variety of health status measures, including self-assessments of general health status, work- limiting disabilities, measures of the ability to accomplish specific tasks of daily living, and medically diagnosed conditions. This study will combine subjective self-assessments with objective measures of functional status and medical conditions to form a multidimensional measure of health status. This model will provide the first estimates of how specific combinations of subjective and objective health status affect transitions among labor force states such as full-time work, part-time work, and retirement.
