OBJECTIVES. Between 1970 and 1983, the rate at which the elderly were
hospitalized grew by more than 40%, whereas the rate of hospitalizatio
n for the younger population was fairly stable. Past attempts to expla
in the different patterns among the young and the old have focused on
technology, insurance, health status, and the supply of hospital servi
ces. These attempts mostly have been unsuccessful. In this article, th
e author examines other possible explanations, namely, that the elderl
y, who experienced a decline in the rate of participation in the labor
force and an increase in income over this period, used increases in a
vailable time (ie, nonwork time) and increases in income to seek out a
nd receive greater amounts of health care. METHODS. Using small-area d
ata from the state of North Carolina and using the method of instrumen
tal variables estimation, the author measures the effects of labor for
ce participation and income on the use of short-term hospitals by the
elderly. RESULTS. Areas where the elderly have high income and areas w
here the elderly are less likely to participate in the labor force are
areas where the elderly have high rates of hospital use. CONCLUSIONS.
The cross-sectional results of this study are consistent with recent
labor force participation, income, and hospital-use trends associated
with the elderly. The negative relation between hospital use and labor
force participation suggests that public policies encouraging work at
late ages, such as the scheduled increase in the normal retirement ag
e of Social Security, may lead to a modest dampening of the demand for
hospital care among the elderly.