The relationship between health and employment. Empirical study for USA

This document examines the two-way relationship between health and employment and their dynamics using U.S. data from the PSID (Panel study of Income Dynamics). This study uses two dependent variables (Self-assessed health and Employment) which are estimated using a bivariate probit model to address the endogeneity problem present between them. The results show that there is a significant evidence of the existence of endogeneity and suggest that good health positively affects the probability of being employed (healthy people have 2.85% more chances to join the labour force than unhealthy people) and that there is a positive impact of being employed on the probability of reporting good health (employees have 0,07% more chances of being healthy than non-employees), however, the effect ofemployment status on health is found not significant.