New Work-Limiting Health Events and Occupational Transitions Among Older Workers

DRC Working Paper Number 2019-01
Publisher: Chicago, IL: Mathematica Policy Research
Mar 28, 2019
Authors
Jody Schimmel Hyde and April Yanyuan Wu

Key Findings:

  • The occupational trajectories of workers who experience new, but temporary, work-limiting conditions are nearly identical to those of workers who do not experience limitations. However, workers who experience new, persistent work-limiting health conditions are significantly more likely than their peers without such conditions to stop working at ages 59, 63, and 67. For example, at age 59, stopping work was 2.5 times more likely for those who had a new persistent work limitation than for those who did not (27.8 percent versus 11.1 percent).
  • For workers who experience persistent work-limiting health conditions and continue to work, significant occupational changes are at least as common as for those without such health conditions who continue working. For example, by age 63, 51 percent of those with persistent work limitations who were working had made a significant occupational change, compared with 43 percent of the non-work-limited group.
  • After accounting for demographic and socioeconomic characteristics, we did not find that the attributes of the occupation a worker held at age 55 were correlated with particular occupational paths for workers with a persistent work-limiting health condition.

Occupational transitions in the late working years are common, and may reflect a desired gradual transition to retirement or bridge jobs. Yet such transitions may also be responses to adverse health events, which occur with increasing frequency as workers age. Understanding how the occupational paths for workers who experience new health conditions differ from those for workers who do not may point to the types of supports that might allow the former to remain in the labor force longer, thus delaying claims for federal disability and retirement benefits, and potentially reducing the risks of poverty into the retirement years. In this paper, we use data from the Health and Retirement Study linked to the Department of Labor’s O*NET data to assess variations in occupational transitions for workers who experience a new work-limiting health condition after age 55 and for those who do not. We find that for workers who remain in the labor force, occupational transitions are common for both groups. Transitions to occupations that are substantially different from the occupation held at age 55 are more common than transitions to occupations that are similar. Relatively few workers remain in the occupation they held at age 55 until they reach age 67, after full Social Security retirement benefits are available. The largest difference between workers who experience new health conditions and those who do not is that the former are much more likely to stop working early: Conditional on remaining at work, the transitions between those who experience new health limitations are quite similar to those who do not.