The ‘Healthy Worker Effect’: Do Healthy People Climb the Occupational Ladder?

December 18, 2017

The association between occupational status and health has been taken to reveal the presence of health inequalities shaped by occupational status. However, that interpretation assumes no influence of health status in explaining occupational standing. This paper documents evidence of non-negligible returns to occupation status on health (which we refer as ‘healthy worker effect’). We use a unique empirical strategy that addressed reverse causality, namely an instrumental variable strategy using the variation in average health in the migrant’s country of origin, a health measure plausibly not determined by the migrant’s occupational status. Our findings suggest that health status exerts significant effects on occupational status in several dimensions; having a supervising role, worker autonomy, and worker influence. The effect size of health is larger than that of an upper secondary education.

via The ‘Healthy Worker Effect’: Do Healthy People Climb the Occupational Ladder? by Joan Costa-Font, Martin Ljunge :: SSRN


The Rising Longevity Gap by Lifetime Earnings – Distributional Implications for the Pension System

December 18, 2017

This study uses German social security records to provide novel evidence about the heterogeneity in life expectancy by lifetime earnings and, additionally, documents the distributional implications of this earnings-related heterogeneity. We find a strong association between lifetime earnings and life expectancy at age 65 and show that the longevity gap is increasing across cohorts. For West German men born 1926-28, the longevity gap between top and bottom decile amounts to about 4 years (about 30%). This gap increases to 7 years (almost 50%) for cohorts 1947-49. We extend our analysis to the household context and show that lifetime earnings are also related to the life expectancy of the spouse. The heterogeneity in life expectancy has sizable and relevant distributional consequences for the pension system: when accounting for heterogeneous life expectancy, we find that the German pension system is regressive despite a strong contributory link. We show that the internal rate of return of the pension system increases with lifetime earnings. Finally, we document an increase of the regressive structure across cohorts, which is consistent with the increasing longevity gap.

via The Rising Longevity Gap by Lifetime Earnings – Distributional Implications for the Pension System by Peter Haan, Daniel Kemptner, Holger Lüthen :: SSRN


Happiness for All? Unequal Hopes and Lives in Pursuit of the American Dream

December 17, 2017

The Declaration of Independence states that all people are endowed with certain unalienable rights, and that among these is the pursuit of happiness. But is happiness available equally to everyone in America today? How about elsewhere in the world? Carol Graham draws on cutting-edge research linking income inequality with well-being to show how the widening prosperity gap has led to rising inequality in people’s beliefs, hopes, and aspirations.

For the United States and other developed countries, the high costs of being poor are most evident not in material deprivation but rather in stress, insecurity, and lack of hope. The result is an optimism gap between rich and poor that, if left unchecked, could lead to an increasingly divided society. Graham reveals how people who do not believe in their own futures are unlikely to invest in them, and how the consequences can range from job instability and poor education to greater mortality rates, failed marriages, and higher rates of incarceration. She describes how the optimism gap is reflected in the very words people use—the wealthy use words that reflect knowledge acquisition and healthy behaviors, while the words of the poor reflect desperation, short-term outlooks, and patchwork solutions. She also explains why the least optimistic people in America are poor whites, not poor blacks or Hispanics.

Happiness for All? highlights the importance of well-being measures in identifying and monitoring trends in life satisfaction and optimism—and misery and despair—and demonstrates how hope and happiness can lead to improved economic outcomes.

via Graham, C.: Happiness for All?: Unequal Hopes and Lives in Pursuit of the American Dream (Hardcover and eBook) | Princeton University Press


The Healthy Immigrant Paradox and Health Convergence

December 12, 2017

The health status of people is a precious commodity and central to economic, socio-political, and environmental dimensions of any country. Yet it is often the missing statistic in all general statistics, demographics, and presentations about the portrait of immigrants and natives. In this paper we are concerned with international migration and health outcomes in the host countries. Through a general literature review and examination of specific immigration countries, we provide insights into the Healthy Immigrant Paradox and the health assimilation of immigrants as we also elucidate selection and measurement challenges. While health is part of human capital, health assimilation is the mirror image of earnings assimilation. Namely, immigrants arrive with better health compared to natives and their health deteriorates with longer residence in the host country, converging to the health of natives or becoming even worse. A deeper understanding of immigrant health trajectories, and disparities with natives and other immigrants is of great value to societies and policymakers, who can design appropriate policy frameworks that address public health challenges, and prevent the health deterioration of immigrants.

via The Healthy Immigrant Paradox and Health Convergence by Amelie Constant :: SSRN


Growth in Earnings and Health: Nothing is as Practical as a Good Theory

December 11, 2017

We discuss some issues associated with the empirical analysis of the relationship between socioeconomic status and health. We point out that, in addition to elaborate empirical modeling and good data, a conceptual framework is helpful both for making sense of one’s own results and for the purpose of reconciling results across studies. We find that when we align the empirical specification with the Grossman model, a negative effect of income on health emerges. Even though this unexpected finding can be rationalized, we think that some caution regarding standard dynamic panel data techniques is warranted in this context.

via Growth in Earnings and Health: Nothing is as Practical as a Good Theory by Daniel Avdic, Martin Karlsson :: SSRN


Earnings Growth and Movements in Self‐Reported Health

December 11, 2017

We employ data from the Panel Study of Income Dynamics to investigate income to health causality. To account for unobserved heterogeneity, we focus on the relationship between earnings growth and changes in self‐reported health status. Causal claims are predicated upon appropriate moment restrictions and specification tests of their validity. We find evidence of causality running from income to health for married women and men. In addition, spousal income appears to be protective for married women.

via Earnings Growth and Movements in Self‐Reported Health by Timothy Halliday :: SSRN


The Effects of Student Loans on the Provision and Demand for Higher Education

December 9, 2017

We characterize the outcomes of the tertiary education market in a context where borrowing constraints bind, there is a two-tier college system operating under monopolistic competition in which colleges differ by the quality offered and returns to education depend on the quality of the school attended. College quality, tuition prices, acceptance cut-offs and education demand are all determined in a general equilibrium model and depend on the borrowing constraints faced by households. Our main finding shows that subsidized student loan policies can lead to a widening gap in the quality of services provided by higher education institutions. This happens because the demand for elite institutions unambiguously increases when individuals can borrow. This does not happen in non-elite institutions, since relaxing borrowing constraints makes some individuals move from non-elite to elite institutions. The higher increase in demand for elite institutions allows them to increase prices and investment per student. As investment and average student ability are complementary inputs in the quality production function, elite universities also increase their acceptance cut-offs. In this new equilibrium, the differentiation of the product offered by colleges increases, where elite universities provide higher quality to high-ability students and non-elite universities offer lower quality to less-able students. We illustrate the main results through a numerical exercise applied to Colombia, which implemented massive student loan policies during the last decade and experienced an increase in the gap of quality of education provided by elite and non-elite universities. We show that the increase in the quality gap can be a by-product of the subsidized loan policies. Such results show that, when analyzed in a general equilibrium setting, subsidized loan policies can have regressive effects on the income distribution.

via The Effects of Student Loans on the Provision and Demand for Higher Education by Rodrigo Azuero, David Zarruk Valencia :: SSRN

Editor’s note: this paper focuses on undergraduate student loans but arguably the same logic/dynamic/perverse consequences may apply to medical student loans.