Rich and healthy--better than poor and sick?: An empirical analysis of income, health, and the duration of the pension benefit spell

I analyze the relationship between duration of the pension benefit spell and pension benefit claims from the German public pension system, with a special emphasis on differential results with respect to health. This relationship is crucial for a potential structural pattern of redistribution between different income and health groups, induced by the public pension system. Evidence for such redistribution from poor to rich is present for most of the specifications in my analysis. The most adequate specification is partially linear, does therefore not impose any parametrical restrictions between duration and benefit claims, and allows for potential endogeneity. The relationship I extract is clearly positive. I also find that redistribution from low-income individuals to individuals with high income is more pronounced the worse the health status is, despite longer benefit spells for pensioners in ill-health.