Kreider, Brent; Pepper, John V.

Proceedings of the Fourth Annual Conference of the Retirement Research Consortium, (2002)

Although there is a long-standing interest in the labor market behavior of older persons, there is little consensus on the reliability of self-reported indicators of health
status. Rather than imposing the strong assumptions required to obtain point identification, Kreider and Pepper (2001, 2002) take a step back to evaluate what can be
inferred under a variety of assumptions that are weaker but arguably more credible than those imposed in the existing literature. In this paper, we review this recent line
of research to reevaluate how employment rates among older persons vary with disability status in light of misreporting errors in work capacity. Although these
assumptions do not identify the conditional employment rates, nonparametric bounds for these parameters can be obtained. Using data from the Health and Retirement
Study, we find strong evidence that models estimated under the assumption of fully accurate reporting lead to biased inferences. In particular, it appears that the
nonworkers tend to overreport disabilities.