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Session: Impact of Employment on Health
Room: Ball Room
Time: Thu 11:45-13:00

Presenter: Caren Tempelman (SEO Economic Research. Care & Security)

Abstract

In this paper we have analyzed the effects of changes in objective and subjective health status of individuals on their labor market behavior in terms of participation, hours worked and absenteeism in the Netherlands. We estimated these effects using a random effects panel data model. This means that we can correct for unobserved individual characteristics that influence the labor market behavior and may otherwise bias estimates, the so-called unobserved heterogeneity. Next to that, using a panel data analysis also means that the estimates are (at least partly) adjusted for simultaneity. The relationship between health and labor market behavior characteristics runs both ways: an individual’s health influences his or her decision to work, but the fact that someone works also influences his or her health status.

The panel dataset used is a unique dataset that contains information on individuals in approximately 2000 households questioned yearly from 1995 until 2008. Subjective health is measured by asking individuals to judge their overall health status on a scale of 1 to 5 starting with ‘excellent’ and ending with ‘bad’. The objective health measure used is the presence or absence of a disability or chronic illness. In the analysis we find that changes in subjective and objective health status strongly influence labor market behavior. This effect is the most prevalent for labor force participation and absenteeism. A deterioration of the subjective health status or the acquirement of a disability or chronic disease leads to a decrease in the chance to participate in paid work. Next to that, not surprisingly, a deterioration of health status also increases the chance of being absent from work due to illness and the number of days one is absent from work due to illness. Changes in the number of hours worked by both men and women following changes in health status are relatively small.

Furthermore, we also find that changes in the lifestyle of individuals have consequences for their labor market behavior. Once men start smoking more than 20 cigarettes per day their chances to participate decrease and the number of days they are absent from work increases. For women the intake of more than 4 glasses of alcohol per day results in a decreased chance to participate in paid work. Finally, being overweight has a strong influence as well. The chances to participate first increase when the body mass index (BMI) increases, but start decreasing at a BMI of 30 for men and 25 for women. In the Netherlands a BMI is considered normal if it is between 18.5 and 25. People with a BMI between 25 and 30 are considered to be overweight and people with a BMI in excess of 30 are considered to be obese. Based on these results it seems that the acceptance of employers of excess weight is higher for men than for women.

Key Terms

health, labor force participation, hours worked, absenteeism, panel data

Authors:

Caren Tempelman (SEO Economic Research. Care & Security)

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