Health and Wages - Panel data estimates considering selection and endogeneity
AbstractThis paper investigates the effects of health on wages by controlling for a number of problems: first, the unobservable genetic endowment may cause an omitted variable bias; second, using a self-reported health variable could induce measurement error; third, the issue of reverse causality arises; and fourth, panel attrition driven by the endogenous decision to participate in the labour market may result in inconsistent estimation. By using recently developed methods, I control for all of the above issues in one framework. The results show that good health raises wages for both women and men. I find the health variable to suffer from measurement error. In the male sample, applying OLS or 2SLS, instead of methods accounting for selection and individual heterogeneity, causes an upward bias in the health coefficient.
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Bibliographic InfoPaper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 43.
Date of creation: 2007
Date of revision:
Health; wages; fixed effects; sample selection; instrumental variables;
Other versions of this item:
- Robert Jäckle & Oliver Himmler, 2010. "Health and Wages: Panel Data Estimates Considering Selection and Endogeneity," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
- Jäckle, Robert & Himmler, Oliver, 2007. "Health and Wages - Panel data estimates considering selection and endogeneity," MPRA Paper 11578, University Library of Munich, Germany, revised Nov 2008.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
- I10 - Health, Education, and Welfare - - Health - - - General
- J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
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