The Effects of Health and Health Shocks on Hours Worked

Lixin Cai, Kostas Mavromaras and Umut Oguzoglu ()

No 3496, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate the impact of health on working hours in recognition of the fact that leaving the labour market due to persistently low levels of health stock or due to new health shocks, is only one of the possibilities open to employees. We use the first six waves of the HILDA survey to estimate the joint effect of health status and health shocks on working hours using a dynamic random effects Tobit model of working hours to account for zero working hours. We follow Heckman (1981) and approximate the unknown initial conditions with a static equation that utilizes information from the first wave of the data. Predicted individual health stocks are used to ameliorate the possible effects of measurement error and endogeneity. We conclude that overall lower health status results in lower working hours and that health shocks lead to further reductions in working hours when they occur. Estimation results show that the model performs well in separating the time-persistent effect of health stock (health status) and the potentially more transient health shocks on working hours.

Keywords: working hours; health; health shocks; Tobit estimation (search for similar items in EconPapers)
JEL-codes: C33 I10 J22 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2008-05
New Economics Papers: this item is included in nep-hea and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - published in: Health Economics, 2014, 23(5), 516-528

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