Abstract

Although the interrelation between health status and labour force participation is an important issue that has been studied mainly for developed countries, little attention has been devoted to empirical researches on health’s effect on labour supply decision for developing countries. This study contributes to the literature by investigating the relationship between health status and labour force participation in a developing country, Turkey. Considering possible endogeneity of health, health equation and labour force participation equation are estimated simultaneously. A two-stage estimation method is applied separately for working age groups of men and women. The results suggest that health positively and significantly affects the labour force participation for all age-gender groups as expected. The effect is larger for older men and younger women. The study also finds that labour force participation has significant positive effect on health for younger men and significant negative effect on health for older women. This suggests that rationalization type of endogeneity may exist only for younger men.

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