Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 07-8: Identifying causal paths between health and socio-economic status: Evidence from European older workforce surveys

Sandra Cavaco (), Jean-Michel Etienne () and Ali Skalli ()
Additional contact information
Sandra Cavaco: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Jean-Michel Etienne: ERMES, Postal: University Panthéon-Assas (Paris 2), 12, Place du Panthéon 75231 Paris Cedex 05, France
Ali Skalli: LEM, Postal: University Panthéon-Assas (Paris 2), 92, rue d’Assas 75270 Paris Cedex 06, France

Abstract: relationship. In addition, such a relationship takes place early in life and keeps on evolving over time so that both one’s health and SES at a given point in time result from the cumulative effects of this spiral. Thus, only by simultaneously accounting for both pathways as well as for their dynamics would one be able to provide a clear picture of both the process of health accumulation and the dynamics of SES formation. We estimate a structural model where a variety of causal paths between different health dimensions and SES measures as well as their dynamics are simultaneously accounted for. This allows distinction between significant causal paths and insignificant ones, while accounting for endogeneity as well as for cofounders. We use the SOCIOLD survey where the targeted population is that of the older workforce (50 and older) from six EU countries (Denmark, Finland, France, Greece, the Netherlands and the UK). Our results show that (i) reverse causality is indeed a crucial issue: one’s previous socio-economic status influences current health and previous health influences current socioeconomic status, (ii) there are cumulative effects in the sense that both health and socio-economic statuses depend on their past values and (iii) the results are sensitive to whether simultaneity is explicitly accounted for or not.

Keywords: Health status; Socio-economic status; Causal paths; Asymptotic least squares

JEL-codes: C31; I10; J14

54 pages, January 1, 2007

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