Francesca Salvati

ifo/CESifo Visiting Researcher

Francesca Salvati, University of Essex, CESifo Guest from 7 to 12 October 2024.

Health and Retirement Age Adjustments

What is the dynamic interaction between health and labor supply at older ages, and how does this relationship inform the design of policies that aim to keep people in the workforce longer? Francesca Salvati answers these questions by developing and estimating a novel structural life-cycle model of health and labor supply of women at older ages. The model allows for feedback effects of working on health and for rich heterogeneity to study how the relationship between health and work differs across socio-economic backgrounds. The model is estimated exploiting a reform that raised women’s age of eligibility for state pensions in the United Kingdom. Working negatively affects health, more so for low educated women already in poor health. Labor supply responses to health and earnings shocks are substantial, particularly for low educated women in poor health. Model simulations show that raising the retirement age widens inequality in health. Low educated women in poor health bear greater costs from the reform, as they cannot afford to retire in the absence of retirement benefits, but working for them is more costly and damages their already poor health.

Ms. Salvati is an applied microeconomist working primarily in the fields of health economics and labor economics, with a particular interest in topics of inequality. Her research agenda, which she will further during her visit at CESifo, focuses on the determinants and dynamics of health and skill formation over the lifecycle. In a current research project, Francesca Salvati and co-authors combine experimental data from Nigeria with a structural model to study how intrahousehold allocations parents make across children drive differences in the human capital they acquire from the outset of life.

Francesca Salvati is an Assistant Professor of Economics at the University of Essex and a Research Associate at the Institute for Fiscal Studies. Prior to joining Essex, she was a Research Fellow at the Bank of Italy. She graduated from University College London with a PhD in Economics in 2021.