Too Sick for Working, or Sick of Working? Impact of Acute Health Shocks on Early Labour Market Exits

TL;DR

This paper examines how sudden health shocks influence early exit from the workforce among Europeans aged 50+, revealing significant gender differences and the importance of health and socio-economic factors.

Contribution

It provides new insights into the impact of acute health shocks on early labour market exits using large-scale European survey data and survival analysis methods.

Findings

Acute health shocks increase early exit hazard, especially for males.

Poor self-perceived health and lower education predict higher exit risk.

Income and living arrangements differently affect men and women.

Abstract

This study investigates the impact of acute health shocks on early labour market exits among individuals aged 50 and over in Europe. Utilising data from Waves 1-8 of the Survey of Health, Ageing, and Retirement in Europe (SHARE), encompassing over 140,000 individuals, I employ survival analysis techniques, including Kaplan-Meier estimators and Cox proportional hazards models. The analysis explores how sudden, severe health events, alongside self-perceived health, chronic conditions, and socio-demographic factors, influence the probability of exiting the workforce before official retirement age. Results indicate that acute health shocks significantly increase the hazard of early labour market exit, with more pronounced effects observed for males. Poorer self-perceived health and lower educational attainment are also strong predictors of early exit. Gender differences are notable: while poorer health consistently raises exit risk for both genders, income acts as a protective factor for females, and living with a partner reduces exit risk for males but increases it for females. These findings highlight the critical role of health in labour market participation and suggest the need for targeted policies to support older workers, particularly those experiencing adverse health events.