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Heterogeneity, State Dependence and Health

  • Halliday, Timothy J.

    ()

    (University of Hawaii at Manoa)

We investigate the evolution of health over the life-cycle. We allow for two sources of persistence: unobserved heterogeneity and state dependence. Estimation indicates that there is a large degree of heterogeneity. For half the population, there are modest degrees of state dependence. For the other half of the population, the degree of state dependence is near unity. However, this may be the result of a high frequency of people in our data who never exit healthy states, potentially resulting in a failure to pin down the state dependence parameter for this segment of the population. We conclude that individual characteristics that trace back to early adulthood and before can have far reaching effects on health.

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File URL: http://ftp.iza.org/dp3463.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3463.

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Length: 29 pages
Date of creation: Apr 2008
Date of revision:
Publication status: published in: Econometrics Journal, 2008, 11(3), 499-516
Handle: RePEc:iza:izadps:dp3463
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  12. Adams, Peter & Hurd, Michael D. & McFadden, Daniel & Merrill, Angela & Ribeiro, Tiago, 2003. "Healthy, wealthy, and wise? Tests for direct causal paths between health and socioeconomic status," Journal of Econometrics, Elsevier, vol. 112(1), pages 3-56, January.
  13. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, in: Studies in Labor Markets, pages 91-140 National Bureau of Economic Research, Inc.
  14. Rust, J., 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Working papers 9430, Wisconsin Madison - Social Systems.
  15. Timothy J. Halliday, 2007. "Income Risk and Health," Working Papers 200710, University of Hawaii at Manoa, Department of Economics.
  16. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
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  19. Magnac, Thierry, 2000. "Subsidised Training and Youth Employment: Distinguishing Unobserved Heterogeneity from State Dependence in Labour Market Histories," Economic Journal, Royal Economic Society, vol. 110(466), pages 805-37, October.
  20. Anne Case & Darren Lubotsky & Christina Paxson, 2002. "Economic Status and Health in Childhood: The Origins of the Gradient," American Economic Review, American Economic Association, vol. 92(5), pages 1308-1334, December.
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  24. Eckstein, Zvi & Wolpin, Kenneth I, 1989. "Dynamic Labour Force Participation of Married Women and Endogenous Work Experience," Review of Economic Studies, Wiley Blackwell, vol. 56(3), pages 375-90, July.
  25. Hilary W. Hoynes & Kenneth Y. Chay & Dean Hyslop, 2004. "True State Dependence In Monthly Welfare Participation:A Nonexperimental Analysis," Working Papers 533, University of California, Davis, Department of Economics.
  26. Deb, Partha & Trivedi, Pravin K, 1997. "Demand for Medical Care by the Elderly: A Finite Mixture Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 313-36, May-June.
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  29. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
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