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The Impact of Education and Occupation on Temporary and Permanent Work Incapacity

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  • Datta Gupta, Nabanita

    ()
    (Aarhus University)

  • Lau, Daniel

    ()
    (Cornell University)

  • Pozzoli, Dario

    ()
    (Copenhagen Business School)

Abstract

This paper investigates whether education and working in a physically demanding job causally impact temporary work incapacity, i.e. sickness absence, and permanent work incapacity, i.e. the inflow to disability via sickness absence. Our contribution is to allow endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find an independent role of both education and occupation on temporary work incapacity only. Having at least primary education reduces women's (men's) probability of temporary work incapacity by 16% (38%) while working in a physically demanding job increases it by 37% (26%). On the other hand, conditional on sickness absence, the effects of education and occupation on permanent work incapacity are generally insignificant.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6963.

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Length: 51 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6963

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Keywords: work incapacity; education; occupation; factor analysis; discrete factor model;

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  1. Hogelund, Jan & Holm, Anders, 2006. "Case management interviews and the return to work of disabled employees," Journal of Health Economics, Elsevier, vol. 25(3), pages 500-519, May.
  2. Morefield Brant & Ribar David C. & Ruhm Christopher J., 2012. "Occupational Status and Health Transitions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(3), pages 1-29, March.
  3. Kemptner, Daniel & Jürges, Hendrik & Reinhold, Steffen, 2010. "Changes in Compulsory Schooling and the Causal Effect of Education on Health: Evidence from Germany," MEA discussion paper series 10200, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  4. Stanislav Kolenikov & Gustavo Angeles, 2009. "Socioeconomic Status Measurement With Discrete Proxy Variables: Is Principal Component Analysis A Reliable Answer?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 128-165, 03.
  5. Wilson, Chris M & Oswald, Andrew J, 2005. "How Does Marriage Affect Physical and Psychological Health? A Survey of the Longitudinal Evidence," The Warwick Economics Research Paper Series (TWERPS) 728, University of Warwick, Department of Economics.
  6. Dana Goldman & Darius Lakdawalla, 2001. "Understanding Health Disparities Across Education Groups," NBER Working Papers 8328, National Bureau of Economic Research, Inc.
  7. Denis Bolduc & Bernard Fortin & France Labrecque & DPaul Lanoie, 2002. "Workers' Compensation, Moral Hazard and the Composition of Workplace Injuries," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 623-652.
  8. Arendt, Jacob Nielsen, 2008. "In sickness and in health--Till education do us part: Education effects on hospitalization," Economics of Education Review, Elsevier, vol. 27(2), pages 161-172, April.
  9. David M. Cutler & Adriana Lleras-Muney, 2006. "Education and Health: Evaluating Theories and Evidence," NBER Working Papers 12352, National Bureau of Economic Research, Inc.
  10. Høgelund, Jan & Holm, Anders & McIntosh, James, 2010. "Does graded return-to-work improve sick-listed workers' chance of returning to regular working hours?," Journal of Health Economics, Elsevier, vol. 29(1), pages 158-169, January.
  11. Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October.
  12. Michelle Rendall, 2010. "Brain versus brawn: the realization of women's comparative advantage," IEW - Working Papers 491, Institute for Empirical Research in Economics - University of Zurich.
  13. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
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