Please use this identifier to cite or link to this item: https://hdl.handle.net/10620/16868
Longitudinal Study: HILDA
Title: The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Mode
Authors: Cai, L 
Publication Date: Jan-2010
Pages: 77-90
Keywords: Health status
Labour force participation
Simultaneous equation model
Panel data
Abstract: A concern when estimating the effect of health on labour supply is that health might be endogenous, and in particular that people might use poor health to justify non-participation. This would result in the effect of health being overestimated if health were treated as exogenous. The paper employs a simultaneous equation model to explore the relationship between health and labour force status, allowing for the endogeneity of health. In addition, the paper takes advantage of panel data to control for unobserved heterogeneity so that more efficient estimation results can be obtained than using cross-sectional data. The results confirm the finding in the literature that health has a positive and significant effect on labour force participation for both males and females. As for the reverse effect, it is found that labour force participation has a negative effect on male health but a positive effect on female health, implying that the justification hypothesis is rejected for males but not for females. The exogeneity hypothesis on the health variable is rejected for both samples based on a joint test.
DOI: 10.1016/j.labeco.2009.04.001
URL: https://www.sciencedirect.com/science/article/abs/pii/S0927537109000426
Keywords: Employment -- Labour force participation; Health; Employment
Research collection: Journal Articles
Appears in Collections:Journal Articles

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