9
provides an overview of ages, years and birth cohorts that were affected by
the 1992 Defense Bill. Birth cohorts 1931 and 1932 are not affected by the Bill. Birth
cohorts 1933-1937 were partly affected, and birth cohorts 1938-1939 were fully
affected, i.e., from the age of 55. The reform was implemented during 1992, which
means that the birth cohort 1933 may also have been affected. Therefore, for our main
analysis, we will discard the birth cohorts 1933-1937. Under the Bill, the estimated
personnel reduction was expected to take about 2 years.
5
Methodological framework and data
The interest is in estimating the effects from the Bill that gave the cohorts born 1938-
1939 the possibility of retiring at the age of 55 instead of at 60. As measurements of
health we have hospital admissions and mortality. We make use of the cohorts born
1931-1932 in the estimation of the counterfactual health of those born 1938-1939. One
crux of using the cohort variation in the estimation is that there may be health
differences at the same age across the cohorts, for instance stemming from differences
in the upbringing. The studied cohorts were young during World War II, and even
though the circumstances in Sweden were not at all comparable to the rest of Europe,
this could have had long consequences for the health of the younger cohorts
especially.
13
Another potential problem is technological improvement in health care
from which the younger cohort gains more than the older. In order to take into account
these potential differences in health at a given age across cohorts, we make use of
male
14
government employees, other than military personnel, to estimate the potential
cohort effect. That is, the effect on one‟s health of being offered early retirement can be
estimated using the following, difference-in-difference, regression model:
(
|
) (
)
(3)
Here,
g
is an unknown functional form,
is the health at age
,
is 1
(0 else) if the individual is born 1938–1939,
M
is 1 (0 else) if the individual was a
military employee at age 54, and
E
is the expectation operator. The Greek letters are
parameters that will be estimated. Here,
measures the effect of the reform given that
13
Cf. Victora et al. (2008).
14
The reason for sampling only men is that no women military personnel exist for these cohorts.
