The Effects of Health on the Extensive and Intensive Margins of Labour Supply

Abstract

Abstract Using the first seven waves of the Understanding Society data, this study estimates the effects of health on the extensive and intensive margins of the labour supply of the UK workers. Earlier studies on the effects of health on labour supply tend to focus on a binary measure of labour force participation or early retirement. The results show that health affects both the margins of labour supply for both males and females. From the preferred model, the results indicate that the effects of health on both the margins of labour supply are larger for females than for males. Furthermore, the results show that while at the extensive margin there does not appear to be a difference in the effect of health between the old and the young for both genders, for males the effect of health on hours worked, conditional on being employed, is larger for the old than for the young, but for females the effect on hours worked is larger for the young than for the old. The results also show that inadequately exploiting the longitudinal features of panel data might have led to bias estimates.

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