Health and Labor Supply Dynamics of Older Married Workers

This empirical analysis investigates how the labor supply dynamics of married workers aged 46-65 is influenced by their own health conditions and by those of their cohabiting partners. Exploiting the information conveyed by the European Community Household Panel (1995-2001), our econometric specifications focus on the transition towards not employment within the next year and use alternative health indicators to describe the overall physical and mental conditions of couple members. We also control for partners labor supply because of its close relationship with their own health and the well-documented coordination with the labor market position of the other couple member. Our results show that while healthier individuals present higher chances of remaining at work in the future, living with healthier spouses affects positively the likelihood of ceasing from work. Finally, when the spouse is employed, the probability of keeping on working is estimated to rise. This last result upholds the hypothesis, suggested by the literature, that couple members prefer to spend their time in the same employment status.