Analysis of the determinants of participation of elderly persons in the labor market in São Paulo, Brazil

Abstract

The aim of this article is to analyze the determinants of the probability of being in the labor force and the number of working hours per week of persons over the age of 60 in the city of São Paulo, Brazil, in 2000. The study pays special attention to the influence of the health of elderly persons on their participation in the labor force. The dataset used in this study is the SABE, a survey on Health, Well-Being, and Aging in Latin America and the Caribbean, with funding from the Pan American Health Organization. To control the bias of endogeneity resulting from the relationship between a person’s state of health and his or her participation on the labor market, the Instrumental Variable method is used. Various measures of health were used in order to analyze different effects of the condition of the health of elderly persons in the labor supply. The results indicate that, among men, variables representing economic status carry considerable weight in explaining their participation in the labor supply. Among women, variables more closely related to family composition are important in explaining the results of the estimations. Having poor health means less probability of being active and of working a greater number of hours per week. Among men, the results of the models related to health conditions estimated by instruments suggest that the effect of participating in the labor force for the elderly could be negative to their health. This may be because of possible truly negative affects on health, or because the working elderly have better schooling and better economic status. This means that they use health services more frequently and are able to describe their health problems more clearly.