Abstract
We examine the labor supply consequences of poor health in the Russian Federation, a country with exceptionally adverse adult health outcomes. In both baseline OLS models and in models with individual fixed effects, more serious ill-health events, somewhat surprisingly, generally have only weak effects on hours worked. At the same time, their effect on the extensive margin of labor supply is substantial. Moreover, when combining the effects on both the intensive and extensive margins, the effect of illness on hours worked increases considerably for a range of conditions. In addition, for most part of the age distribution, people with poor self-assessed health living in rural areas are less likely to stop working, compared to people living in cities. While there is no conclusive explanation for this finding, it could be related to the existence of certain barriers that prevent people with poor health from withdrawing from the labor force in order to take care of their health.
Highlights
In the past two decades, Russia has experienced a radical transformation from a socialist economy to a market economy
We examine the labor supply consequences of poor health in the Russian Federation, a country with exceptionally adverse adult health outcomes
As far as the specific health indicators are concerned, we can see that the proportion reporting their health as being poor or very poor has been on a steady decline over the observed period
Summary
In the past two decades, Russia has experienced a radical transformation from a socialist economy to a market economy. Compared to many other Eastern European and former Soviet Union countries, Russia started out from one of the highest baseline real GDP per capita pre-transition, but subsequently suffered one of the greatest output falls. The Russian population experienced dramatic deteriorations in a range of health outcomes [2, 3]. Out of the group of countries with comparable levels of per capita incomes, until recently Russia had one of the highest male mortality rates, and even did worse than many significantly poorer countries [4]. In contrast to most developing countries, this deterioration in health was predominantly attributable to increases in non-communicable diseases and injuries [5]. As evidenced by the large gender gap in life expectancy, it appears that several behavioral factors, such as increased rates of smoking, excessive alcohol consumption, and mental stress, were among the principal drivers of these trends [3]
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