The effect of work disability on the job involvement of older workers

This paper analyzes the effect of work disability on the job involvement of workers aged 50–65 living in Europe. We elicit a measure of job involvement from a question asking respondents to think about their job and declare whether they would like to retire as early as they can. We exploit objective health indicators and anchoring vignettes to enhance the comparability across individuals of work disability self-assessments. Individuals' evaluations of their health-related work limitations are found to be mildly affected by justification bias but to depend on individual heterogeneity in reporting behaviour. Work disability significantly reduces the job involvement of workers. After controlling for individual fixed-effects and an extensive set of time-varying covariates, moving from the first to the third quartile of the work disability distribution is associated with a 8% increase (4 percentage points) in the probability of desiring to retire as soon as possible. The effect is larger for blue-collar workers. Justification bias and heterogeneity in reporting behaviour do not alter the magnitude of these effects.1