In this paper, we investigate the complex interrelationships
among worktime, wages and health identified in the Grossman model
of the demand for health. We specify a 3-equation simultaneous
model designed to capture the tune dependent character of these
interrelationships, and estimate the model using 8 years of panel
data on 882 males aged 22 to 71. The model is estimated using
Hansen's generalized methods of moments imposing a weak set of
conditions on the error tenn covariance structure. Using our
data, we estimate simpler models with more restrictive
assumptions commonly found in the literature, and find
substantial differences between these estimates and those from
the simultaneous model. For example, the positive relationship
between worktime and health found in other studies disappears
when the relevant simultaneities are accounted for. Our
simultaneous estimates also suggest that worktime spent in
environmentally adverse conditions are inversely related to
health status, while job related physical exercise retards health
deterioration.
*Published:
Journal of Health Economics, vol. 13 (1994) pp. 163-182
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