June 1, 2007
Three substantive chapters examine labour market dynamics among older people.
Chapter 2 analyses older men and women's labour market transitions using the British Household Panel Survey (BHPS). I find large peaks in exit rates out of employment at ages 60 and 65 occurring in the exact birthday month, suggesting strong incentive effects of pension schemes. Discrete-time hazard regression analysis shows that health and potential income out of work are the most important determinants of these transitions, with effects that are larger than found in previous studies for British and US men. When modelling unobserved heterogeneity, the estimated probability of being a mover between work and non-work is twice as high for women as for men.
Chapter 3 analyses how spouses in older couples react to shocks to their partner's labour income using BHPS data. After a separation, wives reduce their labour supply while husbands tend to increase theirs. If a wife becomes unemployed, it does not affect her husband's labour supply while wives whose husband becomes unemployed reduce their labour supply, too. A decline in husband's health causes the wife to reduce her labour supply while husbands tend to increase theirs when facing a decline in wife's health. Partner's death does not have statistically significant labour supply effects.
Chapter 4 analyses the relationship between cognitive functioning and employment among older men and women using data from the English Longitudinal Study of Ageing. Regression analysis shows that the change in cognitive functioning over time does not have any statistically significant effects on the probability to exit or enter employment, or on working hours. These results are not sensitive to the definition of work. My findings differ from earlier research on younger age groups in Germany and the USA where some effects of cognitive functioning on labour force participation were found.