This paper quantifies the impact of health on labour force participation, using South Africa as a case study. This is important given the essential role the labour market plays in economic growth and the potential for poor health to adversely affect labour market outcomes. South Africa has experienced significant disease burden especially due to communicable diseases like HIV/AIDS and tuberculosis. Moreover, conditions like obesity remain a public health concern. Furthermore, the country has witnessed declining labour force participation in recent years. These health and labour market outcomes, coupled with relatively scant literature on the impact of health on the labour market in South Africa, motivate this study. Data is sourced from the first and third waves of the National Income Dynamics Study, a nationally representative panel dataset of South African households and a rich source of health and socio-economic data. Endogenous treatment of self-assessed health in a contemporaneous setting suggests positive and significant impact of health on labour force participation. The hypothesis of exogeneity of self-assessed health in a labour force participation equation is however not rejected. Finally, positive and significant association between health and LFP persists even four years after health assessment.
Impact on Health on Labour Force Participation in South Africa
Working paper 548
South African Journal of Economics