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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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  1. Jürgen Maurer & Roger Klein & Francis Vella, 2008. "Subjective Health Assessments and Active Labor Market Participation of Older Men: Evidence from a Semiparametric Binary Choice Model with Nonadditive Correlated Individualspecific Effects," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 08169, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Jesús M. Carro & Alejandra Traferri, 2011. "State dependence and heterogeneity in health using a bias corrected fixed effects estimator," Economics Working Papers we1118, Universidad Carlos III, Departamento de Economía.
  3. Andrew M. Jones & Stefanie Schurer, 2011. "How does heterogeneity shape the socioeconomic gradient in health satisfaction?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(4), pages 549-579, 06.
  4. Paul Frijters, 2005. "The causal effect of income on health: Evidence from German reunification," Paul Frijters Discussion Papers, School of Economics and Finance, Queensland University of Technology 2005-2, School of Economics and Finance, Queensland University of Technology.
  5. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, vol. 26(4), pages 599-622.
  6. Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, vol. 16(1), pages 155-155, May.
  7. 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.
  8. Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity in self-assessed health: evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 965-981.
  9. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  10. 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.
  11. Deaton, Angus S & Paxson, Christina H, 1998. "Aging and Inequality in Income and Health," American Economic Review, American Economic Association, vol. 88(2), pages 248-53, May.
  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. Jonathan Meer & Douglas L. Miller & Harvey S. Rosen, 2003. "Exploring the Health-Wealth Nexus," NBER Working Papers 9554, National Bureau of Economic Research, Inc.
  14. Jones, Andrew M. & Wildman, John, 2008. "Health, income and relative deprivation: Evidence from the BHPS," Journal of Health Economics, 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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