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

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

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

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

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

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?

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

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

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

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

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

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

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

3MC 14 6/28/08 Correlations between rankings

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

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

3MC 17 6/28/08 Self-reported Work Disability country | none mild moderate severe extreme US | US | SHARE-EU | germany | germany | sweden | sweden | netherl | netherl | spain | spain | italy | italy | france | france | greece | greece | belgium | belgium | Total | Total |

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

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

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

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

3MC 22 6/28/08 Employment Rates US US SHARE-EU SHARE-EU germany germany sweden sweden netherlands spain spain italy italy france france greece greece belgium belgium Total Total 29.54

3MC 23 6/28/08 Work Disability and Employment US SHARE-EU US SHARE-EU none none mild mild moderate moderate severe severe extreme extreme Total Total

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

3MC 25 6/28/08 Dependent Variables

3MC 26 6/28/08 Work Disability Equation

3MC 27 6/28/08 Equation for Thresholds

3MC 28 6/28/08 Vignette Evaluations

3MC 29 6/28/08 Employment Equation

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)

3MC 31 6/28/08 Work Disability Equation Model with DIF US EU-US Country dummies US EU-US Country dummies Female constant Married/LT * Germany * Educyrs * 0.034* Sweden * Heart prob 0.463* Netherlands * Lung dis 0.421* Spain * High blood 0.112* Italy * Diabetes 0.256* France * Pain 0.411* Greece * Arthritis 0.364* Belgium * Cancer 0.206* 0.209* Cesd score 0.148* 0.126* *=significant Obese 0.137* at 2-sided Age * % level Age * 0.161* Age * 0.087

3MC 32 6/28/08 Work Disability Equation Model without DIF US EU-US Country dummies US EU-US Country dummies Female * constant Married/LT * Germany * Educyrs * 0.042* Sweden * Heart prob 0.484* Netherlands * Lung dis 0.423* Spain * High blood 0.139* Italy * Diabetes 0.321* France * Pain 0.426* Greece * Arthritis 0.354* Belgium * Cancer 0.142* 0.262* Cesd score 0.170* 0.114* *=significant Obese 0.167* at 2-sided Age * % level Age * Age * 0.010

3MC 33 6/28/08 Thresholds Equation (Model with DIF) US EU-US US EU-US Work dummy 0.097* * Female 0.096* * Germany * Married/LT 0.051* Sweden * Educyrs Netherlands Heart prob Spain * Lung dis Italy * High blood France * Diabetes * 0.069* Greece * Pain * 0.046* Belgium * Arthritis Cancer 0.066* const thrh 1 0 Cesd score * thr2 - thr * Obese * thr3 - thr * Age thr4 - thr * Age Age sigma u 0.426* *, +: significant at 5% and 10% level, respectively

3MC 34 6/28/08 Employment Equation (Model with DIF) US EU-US US EU-US work disab * 0.272* Female * * Married/LT constant 0.440* Educyrs 0.034* * Germany Heart prob Sweden 0.784* Lung dis Netherlands High blood Spain Diabetes * Italy Pain France Arthritis Greece Cancer Belgium Cesd score * Obese 0.204* * *,+: signif. at Age * * 5%,10% level Age * * Age * *

3MC 35 6/28/08 Employment Equation (Model without DIF) US EU-US US EU-US Work disab * 0.319* Female * * Married/LT const work 0.473* Educyrs 0.030* Germany Heart prob Sweden 0.852* Lung dis Netherland High blood Spain Diabetes * Italy Pain 0.131* France Arthritis Greece Cancer Belgium Cesd score * Obese 0.223* * *,+: significant Age * * at 5%,10% level Age * * Age * *

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

3MC 37 6/28/08 Employment rates

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

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

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

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