What do wages add to the health-employment nexus? Evidence from older European workers
AbstractThis paper adds to the empirical literature on health as an important determinant of employment at older ages by exploring the role in the health-employment nexus of the wage rates of 50 to 64-year-old workers. To do so, we use individual-level panel data from the Survey of Health, Ageing and Retirement in Europe to estimate a system of equations for health, wages and employment. Our model also takes into account both the potential for measurement error in the health variable and selectivity issues related to the wage equation. We find that for men (women) a one-unit (one standard deviation) increase in health yields, on average, a 7 (8) percentage higher hourly wage rate, resulting in a 2 (4) percentage point higher employment probability. We also show a direct impact of health on employment: a similar increase in health raises the employment probability of men (women) by 16 (13) percentage points. As regards differences between European countries, our findings suggest that for all country groups, the mediating role of wages in the health-employment nexus is relatively small while the direct impact of health on employment is relatively large and rather similar. Overall, our findings indicate only a minor role for disability income policies likes wage subsidies to encourage the employment of (older) workers with health limitations, but an instrumental role for policy aimed at helping employers accommodate these workers on the job and keep them employed at older ages.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia in its series Documentos de trabajo - Analise Economica with number 0054.
Length: 34 pages
Date of creation: Jul 2013
Date of revision:
Contact details of provider:
Postal: Chalé dos Catedráticos, 1. Avda. das Ciencias s/n. Campus Vida, 15782 Santiago de Compostela
Phone: 981 59 11 66
Fax: 981 59 99 35
Web page: http://www.usc.es/idega/
More information through EDIRC
Health; wages; employment;
Find related papers by JEL classification:
- D00 - Microeconomics - - General - - - General
- I10 - Health, Education, and Welfare - - Health - - - General
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-08-10 (Economics of Ageing)
- NEP-ALL-2013-08-10 (All new papers)
- NEP-EUR-2013-08-10 (Microeconomic European Issues)
- NEP-HEA-2013-08-10 (Health Economics)
- NEP-LAB-2013-08-10 (Labour Economics)
- NEP-LMA-2013-08-10 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
- Roger H. Gordon & Alan S. Blinder, 1980.
"Market wages, reservation wages, and retirement decisions,"
in: Econometric Studies in Public Finance, pages 277-308
National Bureau of Economic Research, Inc.
- Gordon, Roger H. & Blinder, Alan S., 1980. "Market wages, reservation wages, and retirement decisions," Journal of Public Economics, Elsevier, vol. 14(2), pages 277-308, October.
- Roger H. Gordon & Alan S. Blinder, 1980. "Market Wages, Reservation Wages, and Retirement Decisions," NBER Working Papers 0513, National Bureau of Economic Research, Inc.
- Robert Haveman & Mark Stone & Barbara Wolfe, 1989.
"Market Work, Wages, and Men's Health,"
NBER Working Papers
3020, National Bureau of Economic Research, Inc.
- (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, vol. 26(4), pages 599-622.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Disney, Richard & Emmerson, Carl & Wakefield, Matthew, 2006.
"Ill health and retirement in Britain: A panel data-based analysis,"
Journal of Health Economics,
Elsevier, vol. 25(4), pages 621-649, July.
- Richard Disney & Carl Emmerson & Matthew Wakefield, 2003. "Ill health and retirement in Britain: a panel data based analysis," IFS Working Papers W03/02, Institute for Fiscal Studies.
- Robert Jäckle, 2007.
"Health and Wages - Panel data estimates considering selection and endogeneity,"
Ifo Working Paper Series
Ifo Working Paper No. 43, Ifo Institute for Economic Research at the University of Munich.
- 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.
- André Sapir, 2006.
"Globalization and the Reform of European Social Models,"
Journal of Common Market Studies,
Wiley Blackwell, vol. 44(2), pages 369-390, 06.
- André Sapir, 2006. "Globalisation and the reform of European social models," ULB Institutional Repository 2013/8112, ULB -- Universite Libre de Bruxelles.
- André Sapir, 2006. "Globalization and the reform of European social models," ULB Institutional Repository 2013/167139, ULB -- Universite Libre de Bruxelles.
- AndrÃ© Sapir, 2005. "Globalisation and the reform of European social models," Policy Contributions 31, Bruegel.
- Bonsang Eric & Adam Stéphane & Perelman Sergio, 2010.
"Does Retirement Affect Cognitive Functioning?,"
ROA Research Memorandum
001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
- Erik Meijer & Arie Kapteyn & Tatiana Andreyeva, 2008.
"Health Indexes and Retirement Modeling in International Comparisons,"
614, RAND Corporation Publications Department.
- Susann Rohwedder & Robert J. Willis, 2010.
Journal of Economic Perspectives,
American Economic Association, vol. 24(1), pages 119-38, Winter.
- Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
- Norma B. Coe & Gema Zamarro, 2008.
"Retirement Effects on Health in Europe,"
588, RAND Corporation Publications Department.
- Adriaan Kalwij & Frederic Vermeulen, 2008. "Health and labour force participation of older people in Europe: What do objective health indicators add to the analysis?," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 619-638.
- Arie Kapteyn & James P. Smith & Arthur van Soest, 2007.
"Vignettes and Self-Reports of Work Disability in the United States and the Netherlands,"
American Economic Review,
American Economic Association, vol. 97(1), pages 461-473, March.
- Kapteyn, A. & Smith, J.P. & Soest, A.H.O. van, 2007. "Vignettes and self-reports of work disability in the United States and the Netherlands," Open Access publications from Tilburg University urn:nbn:nl:ui:12-210598, Tilburg University.
- Lixin Cai, 2007.
"Effects of Health on Wages of Australian Men,"
Melbourne Institute Working Paper Series
wp2007n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Sarah Brown & Jennifer Roberts & Karl Taylor, 2010.
"Reservation wages, labour market participation and health,"
Journal of the Royal Statistical Society Series A,
Royal Statistical Society, vol. 173(3), pages 501-529.
- Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008.
- John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998.
"The Dynamic Effects of Health on the Labor Force Transitions of Older Workers,"
NBER Working Papers
6777, National Bureau of Economic Research, Inc.
- Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
- Ana Llena-Nozal & Maarten Lindeboom & France Portrait, 2005.
"The effect of work on mental health: Does occupation Matter?,"
Labor and Demography
- Ana Llena-Nozal & Maarten Lindeboom & France Portrait, 2004. "The effect of work on mental health: does occupation matter?," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1045-1062.
- Stephen E. Snyder & William N. Evans, 2006. "The Effect of Income on Mortality: Evidence from the Social Security Notch," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 482-495, August.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
- Crossley, Thomas F. & Kennedy, Steven, 2002. "The reliability of self-assessed health status," Journal of Health Economics, Elsevier, vol. 21(4), pages 643-658, July.
- John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
- Richard V. Burkhauser & Mary C. Daly, 2012. "Social Security Disability Insurance: Time For Fundamental Change," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(2), pages 454-461, 03.
- David H. Autor & Mark G. Duggan, 2007. "Distinguishing Income from Substitution Effects in Disability Insurance," American Economic Review, American Economic Association, vol. 97(2), pages 119-124, May.
- Cai, Lixin, 2010.
"The relationship between health and labour force participation: Evidence from a panel data simultaneous equation model,"
Elsevier, vol. 17(1), pages 77-90, January.
- Lixin Cai, 2007. "The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model," Melbourne Institute Working Paper Series wp2007n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Adriaan Kalwij & Arie Kapteyn & Klaas Vos, 2010. "Retirement of Older Workers and Employment of the Young," De Economist, Springer, vol. 158(4), pages 341-359, November.
- Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
- Maarten Lindeboom & Marcel Kerkhofs, 2009. "Health and work of the elderly: subjective health measures, reporting errors and endogeneity in the relationship between health and work," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 1024-1046.
- David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers 168, Center for Global Development.
- Lee, Lung-Fei, 1982. "Health and Wage: A Simultaneous Equation Model with Multiple Discrete Indicators," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 199-221, February.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- #HEJC papers for September 2013
by academichealtheconomists in The Academic Health Economists' Blog on 2013-08-31 23:01:38
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuel Fernandez Grela).
If references are entirely missing, you can add them using this form.