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, RAND)

2. Washington 2 8/11/09Motivation  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

3. Washington 3 8/11/09 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

4. Washington 4 8/11/09Vignettes 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?

5. Washington 5 8/11/09 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

6. Washington 6 8/11/09 How Do Vignettes Work? None Extreme Resp. 1 John 1 Mary 1 Liam 1

7. Washington 7 8/11/09 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

8. Washington 8 8/11/09 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

9. Washington 9 8/11/09 The data For a subset of countries 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

10. Washington 10 8/11/09 Example: pain vignette 1 [Catherine]

11. Washington 11 8/11/09 We can combine the responses to the vignettes and rank countries by “toughness”

12. Washington 12 8/11/09 Toughness and the law The OECD has constructed various measures of employment protection by country. We have calculated the correlation between “toughness” and some employment protection measures. We find correlations between.52 and.56

13. Washington 13 8/11/09 We estimate a model explaining work disability from demographics and health conditions, and using vignettes to correct for response scale differences We find that:  Work disability increases with age and with the presence of health conditions; the latter have a stronger effect in Europe than in the US  Work disability is more prevalent among lower education groups in the US, but that is much less the case in Europe  Prevalence of work disability is about equal in the US and in Europe, however that is the result of two opposing factors:

14. Washington 14 8/11/09 Why is work disability the same?  US: more health conditions  EU: stronger effect of health conditions on work disability However, if we were to give Europeans US scales, then the percent reporting none or only mild limitations would increase from 50% to 80%.

15. Washington 15 8/11/09 Work Disability and Employment

16. Washington 16 8/11/09 Estimation results There is evidence of justification bias in the US, but not in the EU (non-working Americans use “softer” scales than working Americans). Work disability has a substantially stronger effect on the probability of employment in the US than in Europe (interpretation: also without health limitations, Europeans over 50 are much less likely to be working than in the US).

17. Washington 17 8/11/09Example Only the employment equation is different. When disabilities get severe, they reduce Employment about equally on both continents

18. Washington 18 8/11/09Conclusions Norms about what constitutes a work disability vary considerably across countries 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 The relation between work disability and work is much stronger in the US than in the EU