Returns to health for Peruvian urban adults : differentials across genders, the life-cycle and the wage distribution
Date
1998-11
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Abstract
This report shows evidence about determinants of health status for urban adults and their
effects on productivity. Accurate estimation of the effect of health on wages is always
difficult to obtain due to endogeneity and measurement error of the health indicators that are
available in household surveys for developing countries. Tue health measure used here is the
number of days ill, which involves endogeneity and reporting error problems that are
controlled for. Tue use of household sanitary infrastructure and proxies for health prices,
measured by the distance to the health center and the average waiting time for attention at
the district level, enabled the construction of an instrument variable estimator for the effects
of health on wages. The instruments are statistically significant for all urban individuals.
Schooling effects on health are positive and strong for urban males, and the positive effect of
schooling on health is clearly increasing with age.
The effect of health on wages is positive and robust, especially for urban males. The larger
effects of an additional day sick are found among older self-employed males (-4.3%) and
those at the bottom of the hourly earnings distribution (-3.8%), and those in the, private
sector (-1.8%). These results suggest that health has a stronger impact on the wages of those
jobs where productivity and health are closely connected, as· in the private sector and the
self-employed. Tue inconclusive results among females indicate the need to work in the
development of a model that better express the way in which women insert into the labor
market.
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Working Paper
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Keywords
PERU, HEALTH STATUS, WAGES, MORBIDITY, HEALTH INDICATORS, EMPLOYMENT, SELF EMPLOYMENT, SOCIAL DETERMINANTS OF HEALTH, GENDER ANALYSIS, ECONOMETRICS, OCCUPATIONAL HEALTH, HEALTH SERVICES, HEALTH POLICY