Essays on Early Life Circumstances, Health and Labor Market Outcomes in Europe

Abstract

This thesis investigates the widely documented positive association between health and socioeconomic status (SES) in adulthood, often referred to as the SES-health gradient in the literature (Marmot and Wilkinson, 1999; Smith, 1999), and it does so in two ways. First, as discussed in Currie and Madrian’s (1999) survey in the Handbook of Labor Economics, (adult) health is a major determinant of (adult) labor market outcomes such as wages, hours and labor force participation, which themselves are key components of an individual’s (adult) SES. Chapter 1, adds to this research by quantifying the role of individual wage rates in the health-employment nexus, an issue that, although previously highlighted by Cai (2009, 2010), has received no attention in the empirical literature with the possible exception of Haveman et al. (1994). Chapter 2, focuses more closely on the direct effect of health on wages by implementing a recent estimation method which addresses the problems unobserved heterogeneity, nonrandom sample selection and measurement error (in the self-reported health variable) in one comprehensive framework. Moreover, by using data before and during the Great Recession—which started in Europe in 2008 (Arpaia and Curci, 2010)—I gain insights into whether, and how, the current crisis has altered the relationship between health and wages.