Does living longer in good health facilitate longer working lives? The relation between disability and working lives

BACKGROUND: Improvements in life expectancy have fuelled debates about the statutory retirement age in many European countries. This article contributes to this debate by investigating how changes in disability may influence both employment outcomes and disability-free life expectancy.
METHODS: We used data from the European Community Household Panel to estimate the impact of disability incidence on labour supply by country using propensity score techniques. In a second step, we translated the estimated effects of disability incidence into effects on working life expectancy as well as disability-free life expectancy using multi-state life tables.
RESULTS: Results from the matching analysis show that individuals who become disabled are more likely to leave the labour market. However, the size of the effect is much weaker than a simple descriptive analysis suggests and varies by country. A 10% decrease in disability incidence results in increases in disability-free life expectancy and working life expectancy of respectively 0.6 and 0.07 years on average.
CONCLUSION: A large part of the differences in employment between disabled and non-disabled individuals is not due to a causal effect of disability on employment. Policies that reduce disability incidence increase disability-free life expectancy but have only a limited impact on working life expectancy.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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