The impact of health on labour outcomes among middle-aged and elderly: Insights from India

Abstract

The impact of ill-health on labour force participation is a well-recognized concern in both developed and developing countries. However, previous studies have often overlooked age differentials in this relationship, assuming uniform effects across age groups. This study aims to fill this gap by examining how ill-health affects labour outcomes among different age segments in India. Utilizing data from the Longitudinal Ageing Study in India (LASI) Wave 1, which covers over 72,000 individuals aged 45 and above, this research investigates the linkage between health and labour force outcomes. The labour outcomes in this study includes labour force participation, labour earnings and hours worked. Present study used instrumental variable approach to mitigate endogeneity issues and establish causal relationships between health and labour outcomes. The Heckman selection model is utilized to address selection bias in analysing wage and hours worked. The study reveals several key findings. Firstly, ill-health consistently leads to a decline in labour force participation among both middle-aged (28 percent) and elderly (36 percent) individuals in India. This underscores the pervasive impact of health on workforce engagement, particularly in a context with limited social security measures. Secondly, the research identifies significant variations in the effects of ill-health on wages and hours worked based on age. Among elderly individuals, there is a pronounced reduction in both wages and hours worked due to ill-health. However, this effect is less pronounced among middle-aged adults. Furthermore, socioeconomic factors play a pivotal role in shaping how ill-health influences labour outcomes among different age groups. This study underscores the importance of considering age differentials in the impact of ill-health on labour outcomes, offering valuable insights for policymakers, practitioners, and researchers seeking to address this critical issue in India’s dynamic socio-economic landscape.