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Health and the Decision to Invest in Education

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  • Schneider Brit S.

    (University of Bayreuth, Department of Law and Economics, Institute of Public Finance, 95440 Bayreuth, Germany)

  • Schneider Udo

    (University of Bayreuth, Department of Law and Economics, Institute of Public Finance, 95440 Bayreuth, Germany)

  • Ulrich Volker

    (University of Bayreuth, Department of Law and Economics, Institute of Public Finance, 95440 Bayreuth, Germany)

Abstract

The paper analyses the relationship between health and education in a two period human capital framework. The resulting substitution and investment effects between health and advanced training work in opposite direction and leave open questions for the empirical part. As econometric model we use a random effects probit model for panel data. Our data consist of 322 individuals for the two years 2004 and 2006. Thereby, we take into account that self-reported measures of health are usually vulnerable to a reporting bias due to anticipation and measurement errors. Estimation results show a dominant substitution effect between different levels of education, indicating that good health implies higher learning efficiency so that the same income can be achieved with lower investment in advanced training. In contrast, we find a dominant investment effect within an educational level, indicating that better health leads individuals with higher education to invest more in additional training.

Suggested Citation

  • Schneider Brit S. & Schneider Udo & Ulrich Volker, 2007. "Health and the Decision to Invest in Education," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(5-6), pages 725-746, October.
    • Handle: RePEc:jns:jbstat:v:227:y:2007:i:5-6:p:725-745
    DOI: 10.1515/jbnst-2007-5-618
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    References listed on IDEAS

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    Cited by:

    1. PV Viswanath, 2018. "Microfinance and the Decision to Invest in Children’s Education," IJFS, MDPI, vol. 6(1), pages 1-20, February.
    2. Brit S. Schneider & Udo Schneider, 2009. "Determinants and Consequences of Health Behaviour: New Evidence from German Micro Data," SOEPpapers on Multidisciplinary Panel Data Research 253, DIW Berlin, The German Socio-Economic Panel (SOEP).

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