The causal impact of health status on labour market outcomes

The causal impact of health status on labour market outcomes: consequences for individuals and households research project is funded by The Health Foundation and part of The social and economic value of health programme.

Project summary

For people of working age, work (or lack of work) is important in determining their current and future wellbeing; and there is a clear two-way relationship between health and work.

The focus of this research is on health and how it is an important determinant of someone’s ability to work, affecting an individual’s chances of gaining employment, ‘good work’, and adequate reward. Using longitudinal data and econometric techniques we aim to estimate the causal impact of health on employment outcomes.

This is an important issue for the UK economy. Work is a key route to financial security and wellbeing, but chronic health problems are increasing among the working age population, and health is often the catalyst for poor labour market outcomes or unemployment. This has implications that extend beyond individual and households to effects on firm performance, productivity levels and economic growth.

The project will engage with employers and other stakeholders including the government's Work and Health Unit to ensure its policy relevance.

The project aims to

• establish the role of physical and mental health in determining individual labour outcomes such as employment, work hours and wages.
• explore the influence of health problems on employer relevant work outcomes, like productivity and absenteeism; this is key to engaging employers in this debate.
• document heterogeneity in the health/work relationship (e.g. by age, job/contract type, health condition and household type), in order to understand the effects across different groups.
• consider spillover effects to and from other household members.
• consider the role of institutions in shaping the labour market response to changes in health, and explore the underlying causal mechanisms.