The Effect of Chronic Disease on Work Behavior over the Life Cycle

Abstract

hours of work, lower wage rates, early retirement and disability transfer programs. Approximately 14 percent of working age individuals report they have a health problem which restricts their activity [34]. While a number of studies exist documenting the relationship between health and labor market activity, most of the evidence specifically examining the association between poor health and labor force participation is derived from cross-sectional analyses. Furthermore, the majority of these studies consider the impact of poor health in general as opposed to specific chronic health conditions.' Thus, while the accumulated evidence clearly indicates that poor health has significant negative effects on labor force participation, these findings are limited because they do not consider the influence of chronic disease on work behavior over the life cycle.2 The purpose of this paper is to explore the effect of the onset of a chronic disease-arthritis -on work behavior over life cycle. Arthritis is an excellent health condition to study in this context for at least two reasons. First, while arthritis is a painful and crippling disease, it is rarely lifethreatening.3 Thus, the major impact of this disease is reflected by the influence it has on the capacity to work. Second, arthritis is the most common chronic disease and second leading cause of work disability in the United States [11]. In fact, the Arthritis Foundation reports that more than 40 million Americans or one in seven persons have some form of this disease. The econometric technique used here-a dynamic hazard model-is the appropriate methodology to examine the health-work relationship over the life cycle because this approach estimates the pattern of labor force behavior after disease onset. Since the results indicate the duration of