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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : The Quarterly Review of Economics and Finance, Volume 44, Issue 1, February 2004, Pages 102–121
This paper examines the effect of health problems on employment, annual hours worked and hourly wages. The Health and Retirement Study data are used to compile employment and health experience profiles over the lifetimes of respondents. These profiles are used to estimate the impact of temporary and permanent illnesses. Permanent health conditions have negative effects on labor market outcomes. Females are found to have larger reductions in wages, but males have bigger decreases in hours worked. The onset of health problems in the 40s produces the largest negative consequences for males, while for females negative effects peak in the 30s.
Previous research has shown that health has a substantial effect on a variety of labor market decisions and outcomes including wages received and hours worked by individuals.1 However, there is no consensus on the magnitude of the effect of health on these outcomes. Few studies have used a longitudinal approach to look at how health influences labor market outcomes across different stages of the working life. Typically, the focus has been on older white males, while the extent to which health affects women and younger males in the workforce has been largely ignored. Often previous research has concentrated on a question posed to individuals such as “Does health limit work,” or “… in the last 12 months, did health limit the amount or type of work …” when determining the impact of health on the labor activities of respondents. One limitation of using data from this type of question from a cross-section data source without detailed information of the health history of the respondents is the lack of information regarding whether the illness is brief or episodic or whether the illness is chronic or long-term. If policymakers are concerned with the long-term consequences of illness, failing to discriminate between temporary or episodic and permanent or long-term illness is likely to lead researchers to biased estimates of the impact of chronic health problems in the labor market. Here, we distinguish between temporary and permanent health problems using life-cycle health histories of individuals. This important distinction is often overlooked or omitted due to data limitations. This is especially important given that a large percentage of health-related costs may be attributable to the relatively few individuals with chronic permanent health conditions. Health is likely to have different impacts on individuals in the labor market depending on the age of the individual at the onset of illness. Individuals who are in the early stages of their work life may make very different adjustments to random health shocks than individuals approaching retirement age. The stock of health capital and the ability to cope with health problems may also vary according to the age at which a health ailment is encountered, leading to differences in the magnitude of the impact of health. Finally, expectations of health and health complications in the workplace may differ according to the age of the worker, so the consequences of health may differ as the health status relative to their peers or same age colleagues differs. Relatively few studies have investigated the extent to which health affects labor market outcomes of both men and women using the same framework.2 The lack of comparable empirical work across the sexes makes it difficult to make generalizations about gender differences and the consequences of health shocks. While it is true that women have more sporadic employment spells than men, over the last two decades a larger percentage of women have participated in the labor market and women have become a substantial portion of the workforce.3 The increase in the labor force participation of women coupled with the growing number of households headed by females points to the importance of a study that examines how both women and men fare in the labor market when faced with health problems. This study uses histories of employment and health experiences of an individual to get improved estimates of the impact of health on the hourly wages earned and annual hours worked by individuals. Health information over the life cycle is used to distinguish between individuals with a history of being healthy or unhealthy and to distinguish between temporary and permanent health problems. Furthermore, the impact of the timing of health problems on wages received and hours worked by the individual is estimated using current and previous employment data and the reported age of the individual when the health shock first arose. Until now, this retrospective aspect of the Health and Retirement Study has been unexploited as a way to measure the long-term consequences of health in the labor market. Additionally, these data permit an analysis with separate estimates of the impact of health for males and females to allow for comparisons across gender.
نتیجه گیری انگلیسی
We estimate the long-term impact of health problems on labor market decisions and outcomes in this paper. While previous studies have limited their focus to a 1- or 10-year period following the onset of illness, the HRS data used here permit a longer span of the life cycle to be investigated. Instead of a single health variable, we distinguish between temporary and permanent illnesses and estimate the impact of each ailment on wages and hours. Furthermore, we take advantage of the retrospective nature of the health and employment data to examine the effect of the age of onset of illness on the loss in wages and hours worked using OLS and fixed effects estimation methods. Moreover, employment histories along with demographic and health data are used in a probit analysis to model the individuals’ decision to work in each year. The results of the probit estimation are then used in an attempt to adjust for any sample selection bias in the wage and hours worked equations. We find poor health has different consequences for males and females. Current permanent health conditions are found to have significant negative effects on average hourly wages of workers. Women face a slightly larger percentage reduction in wages than males as a result of permanent health conditions. Not surprisingly, having permanent health problems also leads to a reduction in the annual hours worked. While women were shown to suffer larger reductions in wages, men seem to bear a larger burden in terms of reductions in hours worked. Temporary health conditions have little impact on hourly wages or hours worked. Analyses that do not distinguish between these two types of ailments but lump them together are likely to understate the long-term impact of persistent health problems on labor market outcomes. We find that the adverse effects of permanent health problems peak with an age of onset in the 40s for men and in the 30s for women. This may be due to the severity of the health shocks experienced in those age groups, so that relative to healthy individuals, the biggest declines in wages and hours worked are observed for individuals whose health problems started at those ages, near the peak of their life-cycle earnings.