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.
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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
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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)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
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by academichealtheconomists in The Academic Health Economists' Blog on 2013-08-31 23:01:38
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