Estimating the Stochastic Sickness Effect on Employment, Worktime and Saving Decisions
Chian-Ming Chen () and
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Chian-Ming Chen: Department of Economics, National Chi Nan University, Nantou, Taiwan
Kuo-Liang Chang: Department of Economics, South Dakota State University
No 32009, SDSU Working Papers in Progress from South Dakota State University, Department of Economics
This paper aims to study labor supply and saving decisions as a result of health uncertainty. O’Donnell (1995) suggested a theoretical positive relationship between working hours (or saving rate) and the perceived health uncertainty. That is, for risk-averse individuals, there exists a precaution motion to work harder and save more when facing the uncertainty for the health condition. We test this hypothetical relationship by applying the 2003-2005 data from the Panel Study of Family Dynamics (PSFD) in Taiwan. Following Hughes and Maguire’s approach (2003), our estimation result indicates that a stochastic sickness has positive effects on the decisions of working time and saving rate.
Keywords: Health; Uncertainty; Labor Supply; Saving (search for similar items in EconPapers)
JEL-codes: D14 I12 J22 (search for similar items in EconPapers)
Pages: 20 pages
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Persistent link: https://EconPapers.repec.org/RePEc:sda:workpa:32009
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