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Effects of Health on Wages of Australian Men

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  • Lixin Cai

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

As a form of human capital health like education determines individuals’ productivity and thus wage rates. While there are numerous overseas studies that examine the effect of health on wages, research on this issue using Australian data is scarce. This paper uses the Household, Income and Labour Dynamics in Australia (HILDA) survey to investigate the effect of health on the wages of working-age Australian men. A simultaneous equation model of health and wages is estimated to account for endogeneity of health. The results confirm the finding in the literature that health has a significant and positive effect on wages, but the significant effect is found only when measurement error and endogeneity of health are accounted for. The reverse effect of wages on health is found insignificant, but there is evidence on the endogeneity of health arising from unobserved factors.

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2007n02.

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Length: 36 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:iae:iaewps:wp2007n02

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Citations

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Cited by:
  1. Gail Pacheco & Don J. Webber, 2011. "Employment propensity: The roles of mental and physical health," Working Papers 2011-01, Auckland University of Technology, Department of Economics.
  2. Manuel Flores & Adriaan Kalwij, 2013. "What do wages add to the health-employment nexus? Evidence from older European workers," Documentos de trabajo - Analise Economica 0054, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  3. Andrew Sharpe & Alexander Murray, 2011. "State of the Evidence on Health as a Determinant of Productivity," CSLS Research Reports 2011-04, Centre for the Study of Living Standards.
  4. 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.
  5. Yolanda Pena-Boquete & Manuel Flores, 2013. "Earnings returns to education, experience and health: Evidence from EU-SILC," ERSA conference papers ersa13p1169, European Regional Science Association.
  6. Lixin Cai, 2008. "Be Wealthy to Stay Healthy: An Analysis of Older Australians Using the HILDA Survey," Melbourne Institute Working Paper Series wp2008n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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