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Dynamics of Poor Health and Non-Employment

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Author Info
Peter Haan
Michal Myck
Abstract

While there is little doubt that the probability of poor health increases with age, and that less healthy people face a more difficult situation on the labour market, the precise relationship between facing the risks of health deterioration and labour market instability is not well understood. Using twelve years of data from the German Socio-Economic Panel we study the nature of the relationship between poor health and non-employment on a sample of German men aged 30-59. We propose to model poor health and non-employment as interrelated risks determined within a dynamic structure conditional on a set of individual characteristics. Applying dynamic panel estimation we identify the mechanism through which poor health contributes to the probability of being jobless and vice versa. We find an important role of unobserved heterogeneity and evidence for correlation in the unobservable characteristics determining the two processes. The results also show strong persistence in the dynamics of poor health and non-employment.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number 195.

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Length: 21 p.
Date of creation: 2009
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Handle: RePEc:diw:diwsop:diw_sp195

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Related research
Keywords: Health; non-employment; risk; ageing; dynamic panel data;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped

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  4. Akay, Alpaslan, 2009. "The Wooldridge Method for the Initial Values Problem Is Simple: What About Performance?," IZA Discussion Papers 3943, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Pierre-Carl Michaud & Konstantinos Tatsiramos, 2008. "Fertility and Female Employment Dynamics in Europe: The Effect of Using Alternative Econometric Modeling Assumptions," Working Papers 643, RAND Corporation Publications Department. [Downloadable!]
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  7. R. T. Riphahn, 1999. "Disability retirement among German men in the 1980s," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(4), pages 628-647, July.
  8. Kuhn, Peter & Sweetman, Arthur, 1999. "Vulnerable Seniors: Unions, Tenure, and Wages Following Permanent Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 671-93, October. [Downloadable!] (restricted)
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  9. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December. [Downloadable!] (restricted)
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  10. Manton, Kenneth G & Stallard, Eric & Corder, Larry, 1998. "Economic Effects of Reducing Disability," American Economic Review, American Economic Association, vol. 88(2), pages 101-05, May. [Downloadable!] (restricted)
  11. Chan, Sewin & Stevens, Ann Huff, 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 484-521, April. [Downloadable!] (restricted)
  12. H. Shelton Brown & José A. Pagán & Elena Bastida, 2005. "The impact of diabetes on employment: genetic IVs in a bivariate probit," Health Economics, John Wiley & Sons, Ltd., vol. 14(5), pages 537-544. [Downloadable!]
  13. Richard Blundell & Costas Meghir & Sarah Smith, 2002. "Pension Incentives and the Pattern of Early Retirement," Economic Journal, Royal Economic Society, vol. 112(478), pages C153-C170, March. [Downloadable!] (restricted)
  14. Adams, Peter & Hurd, Michael D. & McFadden, Daniel & Merrill, Angela & Ribeiro, Tiago, 2003. "Healthy, wealthy, and wise? Tests for direct causal paths between health and socioeconomic status," Journal of Econometrics, Elsevier, vol. 112(1), pages 3-56, January. [Downloadable!] (restricted)
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  15. Rob Alessie & Stefan Hochguertel & Arthur van Soest, 2004. "Ownership of Stocks and Mutual Funds: A Panel Data Analysis," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 783-796, 05. [Downloadable!] (restricted)
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  16. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
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