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Wages and the Demand for Health - A Life Cycle Analysis

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Author Info

  • 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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Related research

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

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References

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  1. 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.
  2. 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.
  3. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
  4. Million, Andreas & Rotte, Ralph & Zimmermann, Klaus F, 1996. "Economic Incentives and Hospitalization in Germany," CEPR Discussion Papers 1516, C.E.P.R. Discussion Papers.
  5. Chung, Ching-Fan & Goldberger, Arthur S, 1984. "Proportional Projections in Limited Dependent Variable Models," Econometrica, Econometric Society, vol. 52(2), pages 531-34, March.
  6. 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.
  7. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  8. Richard Blundell & Rachel Griffith & Frank Windmeijer, 1999. "Individual effects and dynamics in count data models," IFS Working Papers W99/03, Institute for Fiscal Studies.
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  10. 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.
  11. Picone, Gabriel & Uribe, Martin & Mark Wilson, R., 1998. "The effect of uncertainty on the demand for medical care, health capital and wealth," Journal of Health Economics, Elsevier, vol. 17(2), pages 171-185, April.
  12. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  13. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September.
  14. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
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  16. 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.
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  19. 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.
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  21. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
  22. repec:cup:etheor:v:13:y:1997:i:5:p:667-78 is not listed on IDEAS
  23. 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.
  24. Grossman, Michael, 1998. "On optimal length of life," Journal of Health Economics, Elsevier, vol. 17(4), pages 499-509, August.
  25. 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.
  26. Eisenring, Christoph, 1999. "Comparative dynamics in a health investment model," Journal of Health Economics, Elsevier, vol. 18(5), pages 653-658, October.
  27. Ried, Walter, 1998. "Comparative dynamic analysis of the full Grossman model," Journal of Health Economics, Elsevier, vol. 17(4), pages 383-425, August.
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Citations

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Cited by:
  1. Ana Llena-Nozal & Maarten Lindeboom & France Portrait, 2005. "The effect of work on mental health: Does occupation Matter?," Labor and Demography 0501011, EconWPA.
  2. 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.
  3. Andersson, Fredrik & Konrad, Kai A., 2001. "Globalization and Human Capital Formation," IZA Discussion Papers 245, Institute for the Study of Labor (IZA).
  4. Christopher J. Ruhm, 2004. "Macroeconomic Conditions, Health and Mortality," NBER Working Papers 11007, National Bureau of Economic Research, Inc.
  5. 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.
  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. Christopher Ruhm, 2007. "A healthy economy can break your heart," Demography, Springer, vol. 44(4), pages 829-848, November.
  8. Zhao, Zhong, 2005. "Health Determinants in Urban China," IZA Discussion Papers 1835, Institute for the Study of Labor (IZA).

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