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Effects of Health on Wages of Australian Men

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  • Lixin Cai

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

As a form of human capital health like education determines individuals’ productivity and thus wage rates. While there are numerous overseas studies that examine the effect of health on wages, research on this issue using Australian data is scarce. This paper uses the Household, Income and Labour Dynamics in Australia (HILDA) survey to investigate the effect of health on the wages of working-age Australian men. A simultaneous equation model of health and wages is estimated to account for endogeneity of health. The results confirm the finding in the literature that health has a significant and positive effect on wages, but the significant effect is found only when measurement error and endogeneity of health are accounted for. The reverse effect of wages on health is found insignificant, but there is evidence on the endogeneity of health arising from unobserved factors.

Suggested Citation

  • Lixin Cai, 2007. "Effects of Health on Wages of Australian Men," Melbourne Institute Working Paper Series wp2007n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2007n02
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    Citations

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    Cited by:

    1. Lixin Cai, 2008. "Be Wealthy to Stay Healthy: An Analysis of Older Australians Using the HILDA Survey," Melbourne Institute Working Paper Series wp2008n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Yolanda Pena-Boquete & Manuel Flores, 2013. "Earnings returns to education, experience and health: Evidence from EU-SILC," ERSA conference papers ersa13p1169, European Regional Science Association.
    3. Robert Jäckle & Oliver Himmler, 2010. "Health and Wages: Panel Data Estimates Considering Selection and Endogeneity," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    4. Théophile Azomahou & Bity Diene & Mbaye Diene & Luc Soete, 2015. "Optimal health investment and preference structure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(3), pages 521-565, November.
    5. Sung-Joo Yoon, 2019. "What Can We Obtain from Mental Health Care? The Dynamics of Physical and Mental Health," IJERPH, MDPI, vol. 16(17), pages 1-18, August.
    6. Gail Pacheco & Don J. Webber, 2011. "Employment propensity: The roles of mental and physical health," Working Papers 2011-01, Auckland University of Technology, Department of Economics.
    7. Manuel Flores & Melchor Fernández & Yolanda Pena-Boquete, 2020. "The impact of health on wages: evidence from Europe before and during the Great Recession," Oxford Economic Papers, Oxford University Press, vol. 72(2), pages 319-346.
    8. Preety Srivastava & Gang Chen & Anthony Harris, 2017. "Oral Health, Dental Insurance and Dental Service use in Australia," Health Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 35-53, January.
    9. Emily J. Callander & Deborah J. Schofield, 2015. "Multidimensional Poverty and Health Status as a Predictor of Chronic Income Poverty," Health Economics, John Wiley & Sons, Ltd., vol. 24(12), pages 1638-1643, December.
    10. Otsu, Yuki & Yuen, C.Y. Kelvin, 2022. "Health, crime, and the labor market: Theory and policy analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    11. Merna Mohamed Esmat Hefnawi & Hebatallah Ghoneim, 2020. "Human Capital and Economic Growth in Egypt," Proceedings of Business and Management Conferences 10112451, International Institute of Social and Economic Sciences.
    12. Fernández-Val, Iván & Savchenko, Yevgeniya & Vella, Francis, 2017. "Evaluating the role of income, state dependence and individual specific heterogeneity in the determination of subjective health assessments," Economics & Human Biology, Elsevier, vol. 25(C), pages 85-98.
    13. Manuel Flores & Adriaan Kalwij, 2019. "What Do Wages Add to the Health‐Employment Nexus? Evidence from Older European Workers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(1), pages 123-145, February.
    14. Andrew Sharpe & Alexander Murray, 2011. "State of the Evidence on Health as a Determinant of Productivity," CSLS Research Reports 2011-04, Centre for the Study of Living Standards.
    15. Jenny Lye & Joe Hirschberg, 2010. "Alcohol Consumption And Human Capital: A Retrospective Study Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 24(2), pages 309-338, April.
    16. Ann Evans, 2021. "Reflecting on 21 Years of the HILDA Survey," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 462-468, December.
    17. Nerina Vecchio & Paul Scuffham, 2009. "Mental Health and Hours Worked Among Nurses," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 12(3), pages 299-320.

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