THE RELATIONSHIP BETWEEN SELF-PERCEIVED HEALTH AND LABOUR MARKET OUTCOMES IN ROMANIA

The influence of health status on labour market behaviour is a subject which has benefited of a wide empirical work so far. And the common finding of positive effects of a good health on labour market participation, productivity and wages has been supported by strong evidence. On the other hand, the inverse relationship - the effect of labour market participation on health status -has been less studied. Moreover, the issue has benefited of little attention in Romania. Our paper explores the bidirectional relationship between self-perceived health and labour market outcomes in Romania using a simultaneous equations model. We use EU-SILC data for Romania, the sample being representative for the whole population and consisting of approximately 17 thousand of individuals aged 16 and more. We find that health has a positive influence on labour market participation and incomes, but labour market participation has an adverse effect on health. The results show that individuals do not underreport their health status to justify non-participation. In conclusion, health is endogenous to labour market participation and should be treated as so, otherwise the effects of health on labour market status could be underestimated.