Effects of the onset of an adverse health condition on the retirement decision of European workers

This paper estimates the effect of experiencing the onset of an adverse health condition on the retirement decision of European workers. Conditional on institutional characteristics (country and individual dependent) and a selection of socioeconomic and demographic characteristics of the individual, we are able to net out the effect of health conditions that occur before the decision to retire, if retired. This paper compares the effect of adverse health conditions on the decision to retire from individuals aged 50 and over from 11 European countries using the 2004 SHARE survey. The results suggest that suffering an adverse health condition can significantly increase the age of retirement although this may not necessarily imply an increase in total contributory pensions: some specific countries (Greece and Switzerland in particular) may deviate from the overall result. The results are carefully estimated controlling for potential sources of endogeneity and selection bias.