Self-reported morbidity and the returns to health for Peruvian urban males : illness vs. disability
Date
1998-12
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Grupo de Análisis para el Desarrollo (GRADE)
Abstract
This report shows evidence about the determinants of health status for urban adult males and their effects on productivity using two self-reported morbidity measures. 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. The health measures used here are the number of days ill and days disabled. Both of them involve the problem of endogeneity but seem to differ in the magnitude of the reporting error associated to them. Schooling effects on the reporting of days ill and days disabled are negative, strong and clearly increasing with age for males older than 35. Nevertheless, more educated males tend to report more days ill when younger, but that pattern is not found for the reporting of days disabled. The 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 both morbidity measures. The effect of health (morbidity) on wages is positive (negative) and robust among Peruvian urban males. The average estimated returns are larger when using days disabled as the morbidity measure. That difference, though, disappears when the sample is restricted to more homogeneous groups of the population, such as those in the same age group and at a similar place in the wage distribution. The larger effects of an additional day ill or disabled are found among older self-employed males and those at the bottom of the hourly earnings distribution (around -4%). The returns for wage earners in the private sector are larger than in the public sector, but the magnitude does depend on the morbidity measure used (-1.8% with days ill and -2.9% with days disabled). Finally, the study argues for the need of better health indicators, such as antrophometric measures, in order to obtain more accurate estimation of returns to health. Also, additional efforts are needed to model plausibly the way females and those residing in rural areas insert in 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, ECONOMETRICS, OCCUPATIONAL HEALTH, HEALTH SERVICES, HEALTH POLICY