Health and work of the elderly

This paper explores the interrelation between health and work decisions of older workers. For this, two issues are of relevance. Firstly, health and work may be endogenously related becauseof direct causal effects of health on work and vice versa, and because of unobservables that may affect both observed health and work outcomes. Secondly, social surveys usually contain selfassessedhealth measures and research indicates that these may be subject to endogenous, statedependent, reporting bias. A solution to the ‘Health and Retirement Nexus’ therefore requires an integrated model for work decisions, health production and health-reporting mechanisms. Weformulate such a model and estimate it on a longitudinal dataset of older Dutch males.