Health status and labour force participation: Evidence from Australia

Abstract

This paper examines the effect of health on labour force participation using the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The potential endogeneity of health, especially self-assessed health, in the labour force participation equation is addressed by estimating the health equation and the labour force participation equation simultaneously. Taking into account the correlation between the error terms in the two equations, the estimation is conducted separately for males aged 15-49, males aged 50-64, females aged 15-49 and females aged 50-60. The results indicate that better health increases the probability of labour force participation for all four groups. However, th..