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Evaluating the Role of Individual Specific Heterogeneity in the Relationship Between Subjective Health Assessments and Income

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  • Fernández-Val, Iván

    ()
    (Boston University)

  • Savchenko, Yevgeniya

    ()
    (Georgetown University)

  • Vella, Francis

    ()
    (Georgetown University)

Abstract

This paper investigates the impact of income on an individual's subjective self-assessment of own health. We employ recently developed methods in the non linear panel data literature to account for the endogeneity of income and the presence of individual heterogeneity. We examine a panel data set of individuals living in Australia and find no statistically significant relationship between income and health responses. Moreover, the evidence suggests that the variation in the individual specific effects, comprising both observed and unobserved time invariant factors, is primarily responsible for the variation across individuals' responses.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7651.

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Length: 45 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7651

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Keywords: non linear panel data models; subjective health assessments; fixed effects;

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References

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  1. Andrew M. Jones & Stefanie Schurer, 2007. "How Does Heterogeneity Shape the Socioeconomic Gradient in Health Satisfaction?," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0008, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Geert Dhaene & Koen Jochmans, 2014. "Split-Panel Jackknife Estimation of Fixed-Effect Models," Sciences Po Economics Discussion Papers 2014-03, Sciences Po Departement of Economics.
  3. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, Elsevier, vol. 24(5), pages 997-1017, September.
  4. Deaton, A., 1998. "Aging and Inequality in Income and Health," Papers, Princeton, Woodrow Wilson School - Development Studies 181, Princeton, Woodrow Wilson School - Development Studies.
  5. Jürgen Maurer & Roger Klein & Francis Vella, 2011. "Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individual-specific Effects," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 764-774, August.
  6. Meer, Jonathan & Miller, Douglas L. & Rosen, Harvey S., 2003. "Exploring the health-wealth nexus," Journal of Health Economics, Elsevier, Elsevier, vol. 22(5), pages 713-730, September.
  7. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, Springer, vol. 26(4), pages 599-622.
  8. Thomas, D. & Strauss, J., 1997. "Health and Wages: Evidence on Men and Women in Urban Brazil," Papers, RAND - Reprint Series 97-05, RAND - Reprint Series.
  9. Janet Currie & Brigitte C. Madrian, 1998. "Health, Health Insurance and the Labor Market," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 27, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Jesus M. Carro & Alejandra Traferri, 2011. "State Dependence and Heterogeneity in Health Using a Bias Corrected Fixed Effects Estimator," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 402, Instituto de Economia. Pontificia Universidad Católica de Chile..
  11. Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity in self-assessed health: evidence from France," PSE Working Papers halshs-00590524, HAL.
  12. Paul Contoyannis & Andrew M. Jones & Nigel Rice, 2004. "The dynamics of health in the British Household Panel Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 19(4), pages 473-503.
  13. Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, Elsevier, vol. 16(1), pages 155-155, May.
  14. Jones, Andrew M. & Wildman, John, 2008. "Health, income and relative deprivation: Evidence from the BHPS," Journal of Health Economics, Elsevier, Elsevier, vol. 27(2), pages 308-324, March.
  15. Cai, Lixin & Mavromaras, Kostas G. & Oguzoglu, Umut, 2008. "The Effects of Health and Health Shocks on Hours Worked," IZA Discussion Papers 3496, Institute for the Study of Labor (IZA).
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