 | The 131st Annual Meeting (November 15-19, 2003) of APHA |
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| The 131st Annual Meeting (November 15-19, 2003) of APHA |
Gordon G. Liu, PhD and Shawn X. Sun, PhD. Pharmaceutical Policy and Evaluative Sciences, School of Pharmacy, University of North Carolina at Chapel Hill, 205 Beard Hall, Chapel Hill, NC 27599-7360, (919) 966 - 6711, ggliu@unc.edu
OBJECTIVES: There is a large body of health economics literature indicating income effect on health. However, little is known as to how health human capital in turn would contribute to income productivity, leading to a recent increasing research effort on this important policy issue. This seeks to test such a hypothesis in the context of an income production function at the individual level among the US population.
METHODS: The research primary hypothesis is that an improvement in health stock increases one°¯s healthy time and marginal labor productivity, thus leading to higher income capacity. The income production variable is defined as the product of one¢s weekly working hours and wage rate. Individual health is measured by self-perceived health status in five scales ranging from being poor, fair, good, very good, and excellent. Following an income production function, we consider the endogeneity of health and its unobserved factors using a panel model design. To achieve national representation, the model is estimated using the 1999 Medical Expenditure Panel Survey (MPES).
RESULTS: The study sample includes 19,399 whites and 3,261 blacks; and their weekly income was $657 and $539 respectively. The ordinary least squares (OLS) model finds no impact of health on income for both blacks and whites. However, a fixed-effect (FE) panel income model shows a strong health effect on income for blacks, indicating a gained income of $31 for being excellent, $24 for being very good, $26 for being good, and $22 for being fair compared to poor reference. For whites, the FE estimates are similar to OLS results showing no significant association between health and income productivity.
CONCLUSIONS: This study makes two primary contributions. First, it finds a health effect on income productivity to be race-specific for blacks only. A policy implication is that black population deserves a special attention on health improvement when addressing economic policies for poverty reductions. Second, it sheds light on a methodological issue of endogeneity of health in income production, indicating an estimation bias with OLS results as hypothesized.
Learning Objectives:
Keywords: Health, Public Health Policy
Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.