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The Impact of Education and Occupation on Temporary and Permanent Work Incapacity

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  • Nabanita Datta Gupta

    ()
    (Department of Economics and Business, Aarhus University, Denmark)

  • Daniel Lau

    (Cornell University, USA)

  • Dario Pozzoli

    (Department of Economics and Business, Aarhus University, Denmark)

Abstract

This paper investigates whether education and working in a physically demanding job causally impact temporary work incapacity, i.e. sickness absence, and permanent work incapacity, i.e. the inflow to disability via sickness absence. Our contribution is to allow endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find an independent role of both education and occupation on temporary work incapacity only. Having at least primary education reduces women's (men's) probability of temporary work incapacity by 16% (38%) while working in a physically demanding job increases it by 37% (26%). On the other hand, conditional on sickness absence, the effects of education and occupation on permanent work incapacity are generally insignificant.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2012-25.

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Length: 49
Date of creation: 02 Nov 2012
Date of revision:
Handle: RePEc:aah:aarhec:2012-25

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Web page: http://www.econ.au.dk/afn/

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Keywords: Work incapacity; education; occupation; factor analysis; discrete factor model;

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  1. Morefield, G. Brant & Ribar, David C. & Ruhm, Christopher J., 2011. "Occupational Status and Health Transitions," IZA Discussion Papers 5482, Institute for the Study of Labor (IZA).
  2. Michelle Rendall, 2010. "Brain versus brawn: the realization of women's comparative advantage," IEW - Working Papers 491, Institute for Empirical Research in Economics - University of Zurich.
  3. Kemptner, Daniel & Jürges, Hendrik & Reinhold, Steffen, 2011. "Changes in compulsory schooling and the causal effect of education on health: Evidence from Germany," Journal of Health Economics, Elsevier, vol. 30(2), pages 340-354, March.
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  8. Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October.
  9. Wilson, Chris M. & Oswald, Andrew J., 2005. "How Does Marriage Affect Physical and Psychological Health? A Survey of the Longitudinal Evidence," IZA Discussion Papers 1619, Institute for the Study of Labor (IZA).
  10. Stanislav Kolenikov & Gustavo Angeles, 2009. "Socioeconomic Status Measurement With Discrete Proxy Variables: Is Principal Component Analysis A Reliable Answer?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 128-165, 03.
  11. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  12. Denis Bolduc & Bernard Fortin & France Labrecque & DPaul Lanoie, 2002. "Workers' Compensation, Moral Hazard and the Composition of Workplace Injuries," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 623-652.
  13. Arendt, Jacob Nielsen, 2008. "In sickness and in health--Till education do us part: Education effects on hospitalization," Economics of Education Review, Elsevier, vol. 27(2), pages 161-172, April.
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