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Wages and the Demand for Health - A Life Cycle Analysis

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  • Dustmann, Christian

    ()
    (University College London)

  • Windmeijer, Frank

    ()
    (University of Bristol)

Abstract

This paper presents a life cycle model for the demand for health, and derives empirical specifications that distinguish between permanent and transitory wage responses. Using panel data, we estimate dynamic health and health input demand equations. We find evidence of negative transitory wage effects, and positive permanent effects. Estimation results based on our life cycle framework lead to very different conclusions than those based on static cross section analyses that are common in the literature. The analysis emphasises the importance to analyse health related behaviour in a dynamic life cycle context.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 171.

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Length: 51 pages
Date of creation: Jul 2000
Date of revision:
Handle: RePEc:iza:izadps:dp171

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Keywords: Demand for health; life cycle models; panel data;

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References

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  1. Wooldridge, Jeffrey M., 1997. "Multiplicative Panel Data Models Without the Strict Exogeneity Assumption," Econometric Theory, Cambridge University Press, vol. 13(05), pages 667-678, October.
  2. Million, Andreas & Rotte, Ralph & Zimmermann, Klaus F, 1996. "Economic Incentives and Hospitalization in Germany," CEPR Discussion Papers 1516, C.E.P.R. Discussion Papers.
  3. Grossman, Michael, 1998. "On optimal length of life," Journal of Health Economics, Elsevier, vol. 17(4), pages 499-509, August.
  4. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-43, May.
  5. Ried, Walter, 1998. "Comparative dynamic analysis of the full Grossman model," Journal of Health Economics, Elsevier, vol. 17(4), pages 383-425, August.
  6. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  7. Dardanoni, Valentino & Wagstaff, Adam, 1990. "Uncertainty and the demand for medical care," Journal of Health Economics, Elsevier, vol. 9(1), pages 23-38, June.
  8. Winfried Pohlmeier & Volker Ulrich, 1995. "An Econometric Model of the Two-Part Decisionmaking Process in the Demand for Health Care," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 339-361.
  9. Liljas, Bengt, 1998. "The demand for health with uncertainty and insurance," Journal of Health Economics, Elsevier, vol. 17(2), pages 153-170, April.
  10. Geil, Peter, et al, 1997. "Economic Incentives and Hospitalization in Germany," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 295-311, May-June.
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  12. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
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  16. 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.
  17. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May.
  18. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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  20. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
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  22. Ruud, Paul A., 1986. "Consistent estimation of limited dependent variable models despite misspecification of distribution," Journal of Econometrics, Elsevier, vol. 32(1), pages 157-187, June.
  23. Ehrlich, Isaac & Chuma, Hiroyuki, 1990. "A Model of the Demand for Longevity and the Value of Life Extension," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 761-82, August.
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  25. Blundell, Richard & Griffith, Rachel & Windmeijer, Frank, 2002. "Individual effects and dynamics in count data models," Journal of Econometrics, Elsevier, vol. 108(1), pages 113-131, May.
  26. Heckman, James J & Macurdy, Thomas E, 1980. "A Life Cycle Model of Female Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 47-74, January.
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  28. repec:cup:etheor:v:13:y:1997:i:5:p:667-78 is not listed on IDEAS
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Citations

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Cited by:
  1. Andersson, Fredrik & Konrad, Kai A., 2001. "Globalization and Human Capital Formation," IZA Discussion Papers 245, Institute for the Study of Labor (IZA).
  2. 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.
  3. Christopher J. Ruhm, 2006. "A Healthy Economy Can Break Your Heart," NBER Working Papers 12102, National Bureau of Economic Research, Inc.
  4. Dave, Dhaval M. & Kelly, Inas Rashad, 2012. "How does the business cycle affect eating habits?," Social Science & Medicine, Elsevier, vol. 74(2), pages 254-262.
  5. Christopher J. Ruhm, 2004. "Macroeconomic Conditions, Health and Mortality," NBER Working Papers 11007, National Bureau of Economic Research, Inc.
  6. Zhao, Zhong, 2005. "Analysis of Health and Longevity in Oldest-Old Population: A Health Capital Approach," IZA Discussion Papers 1877, Institute for the Study of Labor (IZA).
  7. Gabriel A. Picone & Frank Sloan & Justin G. Trogdon, 2004. "The effect of the tobacco settlement and smoking bans on alcohol consumption," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1063-1080.
  8. Zhao, Zhong, 2005. "Health Determinants in Urban China," IZA Discussion Papers 1835, Institute for the Study of Labor (IZA).
  9. Laura Blow & Andrew Leicester & Frank Windmeijer, 2005. "Parental income and children's smoking behaviour: evidence from the British Household Panel Survey," IFS Working Papers W05/10, Institute for Fiscal Studies.

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