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RR639 An empirical analysis of the effect of health on aggregate income and individual labourmarket outcomes in the UK

This paper investigates whether health in general, and ill-health caused by work in particular, has an impact on various measures of economic performance: GDP growth, productivity and employment levels. It uses two approaches. A macroeconomic approach based on growth equations and UK regional data. A microeconomic approach based on individual-level data from the British Household Panel Survey. It establishes a statistical link between health stocks and economic growth at a macroeconomic level, and an individual’s health stock and their wage and probability of being in employment, at a microeconomic level. Those who are in excellent health earn between 4-7% more per hour than those whose health is average, controlling for other characteristics; while those whose health is poor earn 7-15% less than those whose health is average. Finally, the paper presents some initial estimates linking ill-health to ill-health caused by work. The paper raises a number of issues with these estimates. However, together the analysis suggests that tackling ill-health caused by work may be one component in influencing economic performance.

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Updated 2010-03-19