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The Impact Of Health On A Person's Income

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The impact of health on wage is widely examined by scholars. Most scholars conclude that poor health has negative impact on a person’s income, even though they use different method to test the relationship. Some scholars use the variable which represents health as exogenous variable, but some use it as endogenous variable. In this project, I use self-reported health as an explanatory variable and exploit what is the impact of self-reported health on a person’s income by using multiple regression. My null hypothesis is that there is no significant relationship between health and income, and the alternative hypothesis is that there is significant relationship between health and income. If the coefficient of self-assessed health is …show more content…

In addition The article “Does Health increase income” published in The Economist uses the eradication of malaria to illustrate that particular health improvements that may not influence life expectancy but enable people to be more productive can increase income of each person. These articles are all published before 2000. Even though they do find the negative relationship between poor health and income, their findings and data are not powerful to think about the relationship for today’s youth because some factors, such as technologies and policies, has changed. Hence I use the data from The National Longitudinal Survey of Youth 1997 (NLSY97) whose newest data if from 2011 to test the relationship between income and health. Empirical Model I use the wage function derived from Mincer(1947), which is Ln(wage)=β0 + β1Schooling + β2(Experience)+β3(Experience)^2+ ui However, in Mincer’s model, the omitted variable bias is serious because the model ignores some other factors that can influence wage, such as demographic factor, Region, Occupation and so on. Hence in order to investigate the relationship between health and earnings, and consider the effect of other factors, I modify the model by adding health which is my interest and some other factors, such as hours worked per week, region, race, occupation, sex and marital status. Dataset I use the data from The National Longitudinal Survey of Youth 1997 (NLSY97)

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