The relationship between health and labor market status.

Abstract

Few relationships seem more self-evident than the impact of poor health on labor market behavior. Chronic health conditions that diminish basic physical and mental capabilities are typically expected to disrupt normal work functioning, not only by preventing the performance of some job-related tasks altogether, but also by raising the difficulty or cost of discharging these role responsibilities beyond levels that a reasonable person would judge tolerable. As a result, individuals with impaired health are expected to reduce the amount of time spent in the labor force, the date or age of their complete withdrawal from the job market, and/or the kind of work performed. Because the onset of chronic health problems is not uncommon at any age, and incidence rises steeply with age, health-related work adjustments are likely to be required of most persons at some stage of the life course. In fact, an extensive set of institutional arrangements for retirement and disability insurance benefits has developed over time to cushion the expected losses in market income brought about by these health-induced changes in work effort. Yet, the impact of poor health on labor market status (and the corresponding magnitude of the economic toll exacted by various health problems) is at present neither fully understood nor measured with any precision. Uncertainty about the relation­ ship arises from the difficulty of gauging the extent to which the severity of physical and mental conditions varies across the population in poor health and the degree to which institutional arrangements, such as disability program