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Health status and labour market outcome: Empirical evidence from Australia

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  • Kannika Damrongplasit
  • Cheng Hsiao
  • Xueyan Zhao

Abstract

This paper uses eight waves of Australia Household, Income and Labour Dynamics data to study the issues of state dependence and the short‐run and long‐run response to health shocks on the labour market. We consider six alternative panel data binary dependent variable models with different ways of modelling labour market dynamics and individual heterogeneity. We find that the key results with regard to labour market dependence and the impacts of health shocks are sensitive to model specification and pooling of male and female samples with differences as large as sixfold. Specification analysis is conducted and favours the dynamic fixed effects logit model for separate male and female samples. Methods for evaluating dynamic response paths to a one‐time health shock for binary outcomes are also suggested and results are presented.

Suggested Citation

  • Kannika Damrongplasit & Cheng Hsiao & Xueyan Zhao, 2019. "Health status and labour market outcome: Empirical evidence from Australia," Pacific Economic Review, Wiley Blackwell, vol. 24(2), pages 269-292, May.
    • Handle: RePEc:bla:pacecr:v:24:y:2019:i:2:p:269-292
    DOI: 10.1111/1468-0106.12257
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    Cited by:

    1. Mark N. Harris & Xueyan Zhao & Eugenio Zucchelli, 2021. "Ageing Workforces, Ill‐health and Multi‐state Labour Market Transitions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(1), pages 199-227, February.
    2. Deborah A. Cobb‐Clark & Lihini De Silva, 2021. "Participation, Unemployment, and Wages," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 482-493, December.
    3. Fu Ouyang & Thomas Tao Yang, 2020. "Semiparametric Estimation of Dynamic Binary Choice Panel Data Models," Discussion Papers Series 626, School of Economics, University of Queensland, Australia.
    4. Fu Ouyang & Thomas Tao Yang, 2020. "Semiparametric Estimation of Dynamic Binary Choice Panel Data Models," ANU Working Papers in Economics and Econometrics 2020-671, Australian National University, College of Business and Economics, School of Economics.

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