1 Introduction
New Zealand, in common with many other countries, faces an ageing population. Projections by Statistics New Zealand indicate that by 2051 those over 65 will comprise more than a quarter of the total population. Significant economic changes are expected to follow as a result of these demographic shifts. These in turn will have implications for economic growth, productivity, income, fiscal costs and living standards.
One factor that underlies many of these issues is the extent to which older people will continue in the workforce. What are the key determinants that influence the so-called “retirement decision” of older workers? That decision will reflect an individual's preferences together with such factors as age, health, expected income, family status and savings.
The primary objective of this paper is to assess the importance of a person's health status on their participation in the labour market and on the related decision as to retirement. It is reasonable to expect that health status would in some cases directly affect a person's ability to participate in the labour market. In addition there can be indirect channels, as the health status of a person or their family members may well influence the extent of wealth accumulation, expected expenses in retirement and the need for precautionary saving. These factors in turn will influence decisions about workforce attachment and retirement.
Earlier studies on retirement in New Zealand have not been able to incorporate measures of health status, as there were no unit record data at a national level which incorporated income, wealth, socio-economic information and health measures. Recently this situation has changed and two longitudinal surveys are now available. The first of these is the Survey of Family, Income and Employment (SoFIE) conducted by Statistics New Zealand.[1] A recent study by Holt (2010) analyses the relationship between health and labour market participation using data from SoFIE.
The second of these surveys, and the data on which the present study is based, is a survey on Health, Work and Retirement (HWR) based at Massey University. This rich data source allows us to analyse the relation of overall measures of physical and mental health with income, wealth, living standards and labour force participation. In addition, information on 19 chronic diseases allows their individual effects to be studied. As the sample is for 55 to 70 year-olds, it is possible to obtain population estimates for the health and workforce attachment specifically for this older group.
In Section 2 we present a brief account of the data, followed by an overview of the results from the HWR survey (Section 3). Section 4 discusses methodological issues, and Sections 5 to 10 summarise the results for wealth, income, living standards, health, labour force participation and chronic diseases, respectively. Section 11 contains a summary and conclusions, and highlights some key limitations.
The paper examines associations between health, wealth and retirement; it does not provide evidence that, for example, poor health “causes” retirement. Health and retirement are almost invariably jointly determined and the question of the direction of causality is a challenging statistical issue which we address without resolving.
