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Earnings Effects of Household Investment in Health in Colombia

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  • Rocio Ribero
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    Abstract

    This study considers the links between primary indicators of health and individual labor productivity in Colombia and explores how additional public expenditures on health may improve individuals' health. Sample statistics how that illness occurs more frequently for women than for men, for less educated than for more educated, for rural than urban residents, and for older individuals. The well educated are considerably taller than those without schooling (6 cm. for males and 4 cm. for females). The empirical evidence confirms that health indicators are related to individual earnings in Colombia. A Mincerain log-earnings equation that includes health indicators as a form of human capital in addition to schooling is specified. When the morbidity variable is treated as endogenous and measured with error and the model is estimated by instrumental variables [IV], it becomes significant and has the expected negative sign. Controlling for age, education, sector of employment, gender and geographic location, an increase by 50% on the average number of days an individual was ill and unable to do his ordinary activities in the last month would imply reductions in labor earnings of 11% for urban males, 8% for urban females, 13% for rural males and 7% for rural females. The estimations with height show a positive sign and high significance even without the IV correction, but the coefficients increased with IV methods by an order of magnitude. Having one more centimeter of stature would increase urban female earns by 4.7% and urban male earnings by 12%. Individual's wealth and living in a community with better health provision indicators are linked with better health outcomes. An analysis of the returns to schooling shows that schooling captures part of the effect of health on productivity when the health indicator is not included in the Mincer equation.

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    File URL: http://www.econ.yale.edu/growth_pdf/cdp810.pdf
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    Bibliographic Info

    Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 810.

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    Length: 35 pages
    Date of creation: Nov 1999
    Date of revision:
    Handle: RePEc:egc:wpaper:810

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    Related research

    Keywords: Earnings; Height and Health Indicators;

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    References

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    1. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    2. Schultz, T-P, 1996. "Wage and Labor Supply effects of Illness in Cote d'Ivoire and Ghana : Instrumental Variable Estimates for Days Disabled," Papers 757, Yale - Economic Growth Center.
    3. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
    4. Thomas, Duncan & Strauss, John, 1997. "Health and wages: Evidence on men and women in urban Brazil," Journal of Econometrics, Elsevier, vol. 77(1), pages 159-185, March.
    5. Behrman, Jere R. & Deolalikar, Anil B., 1988. "Health and nutrition," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 14, pages 631-711 Elsevier.
    6. Strauss, J. & Thomas, D., 1995. "Empirical Modeling of Household and Family Decisions," Papers 95-12, RAND - Reprint Series.
    7. Behrman, Jere R., 1993. "The economic rationale for investing in nutrition in developing countries," World Development, Elsevier, vol. 21(11), pages 1749-1771, November.
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    Cited by:
    1. F. Calidoni, 2005. "The effects of public transfers on productivity," Economics Department Working Papers 2005-EP01, Department of Economics, Parma University (Italy).
    2. Marcella Alsan & David E. Bloom & David Canning, 2004. "The Effect of Population Health on Foreign Direct Investment," NBER Working Papers 10596, National Bureau of Economic Research, Inc.
    3. Kenya Valeria Micaela de Souza Noronha & Mônica Viegas Andrade, 2002. "Desigualdades sociais em saúde: evidências empíricas sobre o caso brasileiro," Textos para Discussão Cedeplar-UFMG td171, Cedeplar, Universidade Federal de Minas Gerais.
    4. Attanasio, Orazio & Gomez, Luis Carlos & Rojas, Ana Gomez & Vera-Hernandez, Marcos, 2004. "Child health in rural Colombia: determinants and policy interventions," Economics & Human Biology, Elsevier, vol. 2(3), pages 411-438, December.
    5. Alsan, Marcella & Bloom, David E. & Canning, David, 2006. "The effect of population health on foreign direct investment inflows to low- and middle-income countries," World Development, Elsevier, vol. 34(4), pages 613-630, April.

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