Health Capacity to Work and Retirement Expectations

Understanding how health influences retirement is fundamental for the design of targeted policies that encourage working longer. While there is wide agreement on the relevance of age-related health decline for determining retirement decisions, the process remains a black box. This paper explores the match between individuals’ functional abilities and job demands in the national economy using a new methodology to measure work capacity. Specifically, we construct a measure of work capacity by comparing individuals’ ability levels to the levels needed to perform different occupations, using unique data containing individual ratings that are harmonized with occupational ratings in the O*NET database