Health Status and Labour Market Outcome: Empirical Evidence from Australia
39 Pages Posted: 9 Feb 2018
Date Written: January 16, 2018
This paper uses eight waves of Australia Household, Income, and Labour Dynamics data (HILDA)to study the issues of state dependence and the short-run and long-run response to health shocks on labour market. We consider six alternative panel data binary dependent variable models with different ways of modeling labour market dynamics and individual heterogeneity. We find that the key results with regard to labour market dependence and the impacts of health shocks are sensitive to model specification and pooling of male and female samples with differences as large as six-folds. Specification analysis is conducted and favors the dynamic fixed-effects logit model for separate male and female samples. Methods for evaluating dynamic response paths to a one-time health shock for binary outcomes are also suggested and results presented.
Keywords: Health Status, Labour Force Participation, State Dependence, Dynamic Fixed-Effect Binary Logit Model
JEL Classification: I10, I12, J21, J24
Suggested Citation: Suggested Citation