Compression of Morbidity and the Labor Supply of Older People

Abstract

This paper tests whether there is evidence of compression of morbidity using HRS data and analyzes the effects of this on the labor supply of older people. We find younger cohorts to suffer less from functional problems than older cohorts at given ages. Furthermore, we observe that instrumentalized disability has a negative effect on labor force participation. According to the cohort analysis and the multivariate analysis, it can be concluded that individuals will be able to work longer because of the delay in the onset of disability problems.