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The effect of health on labour supply in nine former Soviet Union countries

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Abstract

This paper examines for the first time the consequences of ill health on labour supply for a sample of nine countries from the former Soviet Union (FSU), using a unique multicountry household survey specifically designed for this region. We control for a wide range of individual, household, and community factors, using both standard regression techniques and instrumental variable estimation to address potential endogeneity. Specifically, we find in our baseline ordinary least squares specification that poor health is associated with a decrease in the probability of working of about 13 %. Controlling for community-level unobserved variables slightly increases the magnitude of this effect, to about 14 %. Controlling for endogeneity with the instrumental variable approach further supports this finding, with the magnitude of the effect ranging from 12 to 35 %. Taken together, our findings confirm the cost that the still considerable adult health burden in the FSU is imposing on its population, not only in terms of the disease burden itself, but also in terms of individuals’ labour market participation, as well as potentially in terms of increased poverty risk. Other things being equal, this would increase the expected “return on investment” to be had from interventions aimed at improving health in this region.

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Notes

  1. Only one respondent per household provided answers, therefore, there was no intrahousehold variation in individual-level variables.

  2. SES variables include education, the number of household members working and household size, marital status, current self-assessment of household finances.

  3. Although this concern is probably less relevant in the countries represented in the HITT survey than in the West, where the poor health-related benefits may be considerably more generous.

  4. In individual fixed effects models, the role played by measurement error may be amplified, as the signal to noise ratio thus reduced.

  5. In our case, days missed from illness in the last 30 days were modelled as a count variable, with zeros left untransformed.

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Acknowledgements

We are grateful to all members of the Health in Times of Transition Project (HITT) study teams who participated in the co-ordination and organization of data collection for this paper. The HITT Project was funded by the European Union’s 7th Framework Program; project HEALTH-F2-2009-223344. The European Commission cannot accept any responsibility for any information provided or views expressed. We also acknowledge support from the WHO Regional Office for Europe for the contribution of MS to this study.

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Authors and Affiliations

  1. Norwich Medical School, University of East Anglia, Norwich, NR4 7TJ, UK

    Yevgeniy Goryakin & Marc Suhrcke

  2. Department of Economics, University of Padua, Padua, Italy

    Lorenzo Rocco

  3. Department of Health Services Research and Policy, European Centre on Health of Societies in Transition, London School of Hygiene and Tropical Medicine, 15-17 Tavistock Place, London, WC1H 9SH, UK

    Bayard Roberts & Martin McKee

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  1. Yevgeniy Goryakin
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  2. Lorenzo Rocco
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  3. Marc Suhrcke
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  4. Bayard Roberts
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  5. Martin McKee
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Correspondence to Yevgeniy Goryakin.

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Goryakin, Y., Rocco, L., Suhrcke, M. et al. The effect of health on labour supply in nine former Soviet Union countries. Eur J Health Econ 15, 57–68 (2014). https://doi.org/10.1007/s10198-012-0455-y

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  • DOI: https://doi.org/10.1007/s10198-012-0455-y

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