Two Essays in Applied Microeconomics: Retirement, Income Inequalities, and Other Economic Indicators of Health and Life Satisfaction

TitleTwo Essays in Applied Microeconomics: Retirement, Income Inequalities, and Other Economic Indicators of Health and Life Satisfaction
Publication TypeThesis
Year of Publication2022
AuthorsAkbari, Z
Academic DepartmentEconomics
UniversityUniversity of Southern Florida
Keywordscasual effects, Happiness, Health Disparities, job withdrawal, Self-reported health, socioeconomic status

The following proposal includes two essays in applied microeconomics. The first essay studied the relationship between income differences among siblings and the health outcomes of the individuals. Health inequalities and the factors associated with them have been a significant interest of health economists. Among those factors that can lead to health differences in adulthood, many studies have studied financial status. There are still many questions about these factors which should be answered in this area, especially about the adulthood income relative to a reference group and how it can be related to differences in adulthood health. The main goal of this paper was to estimate the relationship between health outcomes and income differences among siblings. We considered the siblings as one of the reference groups that could have a meaningful impact on people’s health. This paper also examined whether the income of siblings can have a causal relationship with the good health of the individuals. The causal association between income differences and health indicators, self-reported general health, was examined using the Wisconsin Longitudinal Study data. The results showed a significant positive relationship between the income of a randomly selected sibling and the health outcome but controlling for the endogeneity of the differences in income made the coefficient of the income differences less significant. The results of the fixed effect model showed that the relationship disappeared when we controlled for individual fixed effects. We also discussed the issues of estimating the relationship with controlling for individual fixed effects and suggested a way to solve the issue.

The second essay was on the causal effect of retirement on life satisfaction. The Health and Retirement Study data was used to estimate the impact of retirement on life satisfaction. Additionally, a two-stage process was used to find the potential mechanism through which retirement impacts life satisfaction. Regression discontinuity design was applied to deal with the reverse causality between retirement and life satisfaction. The eligibility age for pension was used as a rule for treatment assignment. The initial result showed that retiring leads to an increased probability of being satisfied with life. Physical activity, sleep quality, and social contacts are how retirement changes life satisfaction.

Citation Key12658