Labor Market Responses to the Onset of Disabilities or Health Problems for Older Workers: A longitudinal study of race difference

This study assesses dynamic racial differences in the labor market responses of older workers (aged 50-64) to the onset of disabilities and health problems. The study uses the national representative longitudinal data of the Health and Retirement Study (HRS) from 1992 to 2002. Discrete hazard models are developed to study differences across race as far as the risk of older workers exiting the labor market following the occurrence of disabilities or health problems. Additionally, multinomial logit models are developed to study the differences across race with respect to full-time to part-time transitions and changes in employers following the occurrence of disabilities or health problems. The results show that exit risk is significantly higher for older black female workers with reported work limitations or major health events than for their white counterparts. For older males, differences in exit risk across race are evident only where functional limitations exist. The magnitudes of the effects of the onset of disabilities or health problems on employer transitions or on the decision whether or not to choose a part-time job are much less than the effects of those on the hazard of exiting the labor market. Black males are more likely to work part-time as well as exit the labor market than white males following the onset of functional limitations. Black females are less likely to change employers than white females following the onset of functional limitations. The study suggests that as blacks become older, they may suffer relatively greater economic losses following the onset of disabilities or health problems than their white counterparts. It would appear that differences across race more likely result from differences in labor market exit risk than from differences in job transition. It would also appear that racial differences in education and job skills may explain some of the racial gaps among older workers---especially among female older workers---in labor market responses to the onset of disabilities and health problems. Further studies on the issue are important for understanding differences across race with respect to labor decision processes and economic well-being when individuals approach retirement.

Health Problems (D353100)

16560