Working Paper
The Impact of New Drug Launches on the Loss of Labor from Disease and Injury: Evidence from German Panel Data
This paper studies the evolution of early retirement due to disease and injury in the German
labor force between 1988 and 2004. Using data from the German Federation of Public
Pension Providers, the IMS Health Drug Launches database and the WHO Mortality
Database, we show that new drug launches have substantially helped to reduce the loss of
labor at the disease-level over time. We employ a variety of econometric methods to exploit
the pseudo-panel structure of our dataset and find that in Western Germany alone each new
chemical entity has on average saved around 200 working years in every year of the
observation period. Controlling for individual determinants of health-related retirement, such
as worker’s age, sex and type of work, we also find evidence that the 2001 reform of pension
laws has led to further reductions in the loss of labor from disease and injury.
Key Words
- Early retirement
- Frühverrentung
- Medical technology
- Pension reform
- Pseudo-panel data
- Rehabilitation services