1. Work Disability, Work, and Justification Bias in Europe and the US Arie Kapteyn (RAND) James P. Smith (RAND) Arthur van Soest (Netspar, Tilburg University)

2. 3MC 2 6/28/08Overview  Motivation  Anchoring vignettes, justification bias  Data (HRS & SHARE)  Model for work disability, justification bias, and employment  Estimation and simulation results  Conclusions

3. 3MC 3 6/28/08Motivation  Labor force participation of older workers is policy relevant  Health is a main reason for not participating  Self-reported work disability is a summary measure of work-related health…  But has problems:  Comparability across countries  Justification bias  Anchoring vignettes can be used to tackle these problems

4. 3MC 4 6/28/08 This paper…  Demonstrates that anchoring vignettes can be used to analyze justification bias  Uses data on work disability self-reports, work disability vignette evaluations, and employment status from SHARE 2004 and HRS 2004  Introduces an econometric model which extends the hopit model with an employment equation and accounts for  an effect of employment status on response scales and reported work disability  an effect of work disability on employment  Presents estimates of this model for the US and 8 EU countries

5. 3MC 5 6/28/08 Self report of work disability “Do you have any impairment or health problem that limits the kind or amount of work you can do?” Response categories: 1.None 2.Mild 3.Moderate 4.Severe 5.Extreme/Cannot Do

6. 3MC 6 6/28/08Vignettes Example (affect): Henriette generally enjoys her work. She gets depressed every 3 weeks for a day or two and loses interest in what she usually enjoys but is able to carry on with her day-to-day activities on the job. Does Henriette have any impairment or health problem that limits the kind or amount of work she can do?” None, Mild, Moderate, Severe, or Extreme/Cannot Do?

7. 3MC 7 6/28/08 More examples Pain Vignette: Catherine suffers from back pain that causes stiffness in her back especially at work but is relieved with low doses of medication. She does not have any pains other than this generalized discomfort. Cardio Vascular Disease Vignette: Norbert has had heart problems in the past and he has been told to watch his cholesterol level. Sometimes if he feels stressed at work he feels pain in his chest and occasionally in his arms. We work with nine vignettes: three on pain, three on affect, three on CVD

8. 3MC 8 6/28/08 How Do Vignettes Work? None Extreme Resp. 1 John 1 Mary 1 Liam 1

9. 3MC 9 6/28/08 How Do Vignettes Work: Differential Item Functioning (DIF) None Extreme Resp. 1 John 1 Mary 1 Liam 1 None Extreme Resp. 2 John 2 Mary 2 Liam 2

10. 3MC 10 6/28/08 How Do Vignettes Work: Adjusting for DIF None Extreme Resp. 1 John 1 Mary 1 Liam 1 None Extreme Resp. 2 John 2 Mary 2 Liam 2 None Extreme Resp. 2 John 2 Mary 2 Liam 2

11. 3MC 11 6/28/08 The data For a subset of counties that agreed to participate, SHARE wave 1 in 2004 included a set of vignette questions on general health status and on work limiting disabilities as part of a drop-off questionnaire for a random subsample of the 50+ population. The eight SHARE countries that agreed to participate in the drop-off containing vignette questions were Germany, France, Spain, Belgium, Greece, Italy, the Netherlands, and Sweden. HRS 2004 administered the same vignettes, in an experimental module administered to a random subsample of the 50+ population in the US

12. 3MC 12 6/28/08 Example: pain vignette 1 [Catherine]

13. 3MC 13 6/28/08 Red is tough; Blue is soft Rank correlations: (1,2) = 0.44; (1,3) = 0.06; (2,3) = -0.33 (1,2) = 0.44; (1,3) = 0.06; (2,3) = -0.33

14. 3MC 14 6/28/08 Correlations between rankings

15. 3MC 15 6/28/08 A ranking of toughness

16. 3MC 16 6/28/08 Toughness and employment protection

17. 3MC 17 6/28/08 Self-reported Work Disability country | none mild moderate severe extreme ---------+------------------------------------------ US | 49.84 21.51 16.02 7.35 5.28 US | 49.84 21.51 16.02 7.35 5.28 SHARE-EU | 46.56 25.46 17.37 7.80 2.81 germany | 40.19 30.04 21.34 7.02 1.41 germany | 40.19 30.04 21.34 7.02 1.41 sweden | 53.62 15.11 14.86 12.17 4.24 sweden | 53.62 15.11 14.86 12.17 4.24 netherl | 52.05 30.66 9.27 4.92 3.10 netherl | 52.05 30.66 9.27 4.92 3.10 spain | 47.59 20.24 17.21 11.70 3.26 spain | 47.59 20.24 17.21 11.70 3.26 italy | 46.01 27.04 15.47 7.20 4.27 italy | 46.01 27.04 15.47 7.20 4.27 france | 49.13 23.02 18.60 6.60 2.65 france | 49.13 23.02 18.60 6.60 2.65 greece | 68.32 12.17 10.20 7.43 1.89 greece | 68.32 12.17 10.20 7.43 1.89 belgium | 36.64 35.22 19.13 6.91 2.11 belgium | 36.64 35.22 19.13 6.91 2.11---------+----------------------------------------- Total | 47.00 24.92 17.18 7.74 3.15 Total | 47.00 24.92 17.18 7.74 3.15

18. 3MC 18 6/28/08 Simulation results: Work disability in EU and US (Hopit model)

19. 3MC 19 6/28/08 Simulation results: Italy and US (Hopit model)

20. 3MC 20 6/28/08 Simulation results: Germany and US (Hopit model)

21. 3MC 21 6/28/08 Simulation results: Spain and US (Hopit model)

22. 3MC 22 6/28/08 Employment Rates US 50.16 US 50.16 SHARE-EU 26.27 SHARE-EU 26.27 germany 28.42 germany 28.42 sweden 40.82 sweden 40.82 netherlands 32.32 spain 26.34 spain 26.34 italy 20.41 italy 20.41 france 26.42 france 26.42 greece 25.98 greece 25.98 belgium 21.19 belgium 21.19 Total 29.54 Total 29.54

23. 3MC 23 6/28/08 Work Disability and Employment US SHARE-EU US SHARE-EU----------------------------- none 67.61 36.94 none 67.61 36.94 mild 48.70 22.92 mild 48.70 22.92 moderate 30.38 13.78 moderate 30.38 13.78 severe 14.58 8.84 severe 14.58 8.84 extreme 0.99 4.54 extreme 0.99 4.54----------------------------- Total 50.16 26.27 Total 50.16 26.27

24. 3MC 24 6/28/08 Work Disability and Employment

25. 3MC 25 6/28/08 Dependent Variables

26. 3MC 26 6/28/08 Work Disability Equation

27. 3MC 27 6/28/08 Equation for Thresholds

28. 3MC 28 6/28/08 Vignette Evaluations

29. 3MC 29 6/28/08 Employment Equation

30. 3MC 30 6/28/08 Important Assumptions  Response consistency: same thresholds in self- assessments and vignette evaluations  Justification bias = Shift in response scales = a special form of DIF  Vignette equivalence: workers and non-workers and respondents in different countries interpret vignettes in the same way  No causal effect of employment status on health (cf., e.g., Böckerman & Ilmakunnas, Health Economics, 2009)

31. 3MC 31 6/28/08 Work Disability Equation Model with DIF US EU-US Country dummies US EU-US Country dummies Female -0.017 -0.075 constant -0.189 Married/LT -0.118* 0.078 Germany -0.689* Educyrs -0.039* 0.034* Sweden -1.066* Heart prob 0.463* -0.033 Netherlands -0.699* Lung dis 0.421* -0.098 Spain -0.999* High blood 0.112* -0.028 Italy -0.895* Diabetes 0.256* -0.076 France -1.023* Pain 0.411* 0.048 Greece -1.690* Arthritis 0.364* -0.038 Belgium -0.654* Cancer 0.206* 0.209* Cesd score 0.148* 0.126* *=significant Obese 0.137* -0.020 at 2-sided Age 58-64 0.166* 0.004 5% level Age 65-71 0.135* 0.161* Age 72+ 0.426* 0.087

32. 3MC 32 6/28/08 Work Disability Equation Model without DIF US EU-US Country dummies US EU-US Country dummies Female -0.106* -0.007 constant -0.126 Married/LT -0.175* 0.110+ Germany -0.503* Educyrs -0.046* 0.042* Sweden -0.612* Heart prob 0.484* -0.027 Netherlands -0.615* Lung dis 0.423* -0.141 Spain -0.646* High blood 0.139* -0.065 Italy -0.798* Diabetes 0.321* -0.110 France -0.848* Pain 0.426* 0.006 Greece -1.260* Arthritis 0.354* -0.019 Belgium -0.542* Cancer 0.142* 0.262* Cesd score 0.170* 0.114* *=significant Obese 0.167* 0.004 at 2-sided Age 58-64 0.157* -0.018 5% level Age 65-71 0.138* 0.122 Age 72+ 0.463* 0.010

33. 3MC 33 6/28/08 Thresholds Equation (Model with DIF) US EU-US US EU-US Work dummy 0.097* -0.104* Female 0.096* -0.082* Germany -0.187* Married/LT 0.051* -0.031 Sweden -0.452* Educyrs 0.003 -0.004+ Netherlands -0.074+ Heart prob -0.016 -0.014 Spain -0.356* Lung dis -0.002 0.037 Italy -0.083* High blood -0.024+ 0.028 France -0.147* Diabetes -0.065* 0.069* Greece -0.417* Pain -0.038* 0.046* Belgium -0.114* Arthritis -0.005 -0.008 Cancer 0.066* -0.048 const thrh 1 0 Cesd score -0.022* 0.008 thr2 - thr1 0.722* Obese -0.039* 0.014 thr3 - thr2 0.704* Age 58-64 0.021 0.034 thr4 - thr3 0.822* Age 65-71 0.020 0.039 Age 72+ 0.021 0.026 sigma u 0.426* *, +: significant at 5% and 10% level, respectively

34. 3MC 34 6/28/08 Employment Equation (Model with DIF) US EU-US US EU-US work disab -0.464* 0.272* Female -0.246* -0.319* Married/LT -0.034 -0.125 constant 0.440* Educyrs 0.034* -0.020* Germany 0.291 Heart prob -0.015 -0.002 Sweden 0.784* Lung dis -0.125 0.002 Netherlands 0.241 High blood -0.001 0.051 Spain 0.208 Diabetes -0.228* 0.152 Italy -0.126 Pain 0.102+ -0.025 France 0.300+ Arthritis 0.031 -0.058 Greece 0.157 Cancer 0.004 0.034 Belgium 0.041 Cesd score -0.051* -0.026 Obese 0.204* -0.284* *,+: signif. at Age 58-64 -0.620* -0.406* 5%,10% level Age 65-71 -1.268* -1.296* Age 72+ -1.813* -1.402*

35. 3MC 35 6/28/08 Employment Equation (Model without DIF) US EU-US US EU-US Work disab. -0.516* 0.319* Female -0.289* -0.282* Married/LT -0.069 -0.096 const work 0.473* Educyrs 0.030* -0.015 Germany 0.310 Heart prob 0.015 -0.021 Sweden 0.852* Lung dis -0.102 -0.032 Netherland 0.239 High blood 0.016 0.034 Spain 0.252 Diabetes -0.189* 0.122 Italy -0.129 Pain 0.131* -0.058 France 0.310+ Arthritis 0.041 -0.066 Greece 0.215 Cancer -0.023 0.058 Belgium 0.044 Cesd score -0.035* -0.039 Obese 0.223* -0.296* *,+: significant Age 58-64 -0.633* -0.399* at 5%,10% level Age 65-71 -1.285* -1.288* Age 72+ -1.815* -1.407*

36. 3MC 36 6/28/08 Simulated self-reported work limitations; model including employment equation

37. 3MC 37 6/28/08 Employment rates

38. 3MC 38 6/28/08 Percent working by disability category

39. 3MC 39 6/28/08 Percent working by disability category

40. 3MC 40 6/28/08 Conclusions 1 Norms about what constitutes a work disability vary considerably across countries Elicitation of norms by vignettes is fairly noisy, but suggests some consistency across domains and the norms appear consistent with legal employment protection Differences in self-reports are at least partly a reflection of social norms, rather than of “true” disability differences Scale corrections make a difference for comparing work disability across countries

41. 3MC 41 6/28/08 Conclusions 2 Justification bias is significant in the US but not in SHARE-EU, reflecting different attitudes towards working Correcting for justification bias reduces the estimated effect of work disability on employment in the US, but not very much The relation between work disability and work is much stronger in the US than in the EU Other reasons than health reduce participation among older people in the EU more than in the US