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Dynamics of Health and Labor Market Risks

Aufsätze referiert extern - Web of Science

Peter Haan, Michal Myck

In: Journal of Health Economics 28 (2009), 6, S. 1116-1125


While there is little doubt that the probability of poor health increases with age, and that less healthy people face a more difficult situation on the labor market, the precise relationship between facing the risks of health deterioration and labor market instability is not well understood. Using 12 years of data from the German Socio-Economic Panel we study the nature of the relationship between poor health and non-employment on a sample of German men aged 30-59. We propose a joint model of health and labor market risks which identifies the mechanism through which poor health contributes to the probability of being jobless and vice versa. We find an important role of unobserved heterogeneity and evidence for correlation in the unobservable characteristics determining the two processes. The results also show strong persistence in the dynamics of health and labor market risks.

Peter Haan

Head of Department in the Public Economics Department

JEL-Classification: C33;J21;J14
Keywords: Poor health, Labor market risk, Self-assessed health, Ageing, Dynamic panel data