| Author/Presenter |
Wayne Simpson (University of Manitoba) |
| Co-authors |
Derek Hum (University of Manitoba) |
| |
Eyob Fissuh (University of Manitoba) |
| Title |
The Impact of Health on Labour Supply over the Life Cycle |
| Abstract |
Estimates of the impact of health on labour supply are important to quantify the returns to private and public investment in health and accident prevention, but estimates vary widely for older men and are scarce for other groups. In addition, estimates using U.S. data cannot ignore confounding differences in health insurance status which are correlated with both health and labour market outcomes. We provide new and more comprehensive estimates by developing an empirically tractable life cycle model of labour supply that incorporates the accumulation of health stock and estimate the model in the Canadian context of universal health insurance coverage. Our model is able to identify two important sources of bias in the estimation the impact of health on labour supply, one arising from endogenous health status and the other arising from the presence of unobserved effects or heterogeneity. Our econometric results suggest that health status impacts labour supply at all stages of the life cycle but that informal and cross-sectional evidence of large health impacts on labour supply are significantly overstated because of the presence of unobserved effects. |
| Web Link |
http://economics.ca/2008/papers/1041.pdf |