Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

The aging of the baby-boom generation will produce a dramatic increase in retirement in the upcoming decades. Given this trend, understanding the factors influencing retirement from the labor force will be critical to forecasting how the near elderly workforce in the United States will evolve. Most of our existing knowledge on retirement comes from research on married men. A few studies have examined married couples; however, there has been relatively little attention paid to the retirement behavior of other demographic groups, in particular, singles and women.

The availability of health insurance is a crucial factor in a couple's ability to retire before they are eligible for Medicare at age 65. Because the prevalence of poor health and chronic disease rises with age, the near elderly have higher expected medical expenses than younger cohorts. Prior to the age of Medicare eligibility, employment-based sources for their health insurance are a valuable resource for the near elderly.

In this paper, we examine the role of employer provided health insurance in the retirement decisions of single workers, single-earner couples, and dual-earner couples using Health and Retirement Study from 1992 to 2004. Our analysis aims to answer the following questions: Does health insurance have a similar effect on the retirement decision for men and women? Does the availability of coverage through a spouse allow dual-earner couples flexibility in retirement compared to single worker or single-earner couples? Does the effect of health insurance on the retirement decision for married workers vary depending on the labor force and health status of the spouse?

We estimate multivariate models of the decision to retire for single men, single women, single-earner couples with male head, single-earner couples with a female head, and dual earner couples. We model the decision to retire for singles and single-earners using a discrete time probit model. For dual earner couples, we use a discrete time bivariate probit model to account for joint decision-making in the household. Our primary explanatory variable of interest is whether the worker holds (a) employer provided health insurance that includes retiree health insurance, (b) employer provided health insurance without retiree health insurance, or (c) no employer provided health insurance. We include a number of demographic, health, and job control variables in our models.

Our preliminary findings from these models suggest that single men and women respond similarly to retiree health insurance availability. However, married women are far less responsive to retiree health insurance while their husband is in the labor force, but become more responsive to the availability of retiree health insurance from their own jobs or through their husband once they become sole earners. While retirement decisions for married women in dual-earner couples seem to hinge on their husband, but the married men do not seem as responsive to their wives' labor force and health insurance status. However, the difference between the sexes dissipates among single workers. These results suggest that examining retirement patterns for each demographic group individually is important in forecasting changes to the workforce.