A study by UIC Barcelona shows how overall economic conditions affect the relationship between health and wages

26/07/19
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The paper by lecturer Manuel Flores was published in the journal Oxford Economic Papers.

A study by UIC Barcelona shows how overall economic conditions affect the relationship between health and wages
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Manuel Flores, a researcher in the Research Group for Evaluation and Public Policies (IRAPP), recently published a study entitled “The impact of health on wages: evidence from Europe before and during the Great Recession” in the journal Oxford Economic Papers, published by Oxford University Press.

In his research, Flores investigates whether the causal effect of health on the hourly wage rate changes along with the overall economic conditions and, if so, why. “We found that, in Europe, during the period before the recent Great Recession, the people of working age in the best health have an hourly wage rate 5 to 6% higher than the average”, explains the researcher. “However, during the Great Recession, the positive impact of health on wages disappeared”.

The researchers attribute this finding to an increase in “presenteeism”, or working while sick, during this period, which reduced the impact of poor health on wages in the short term. “From the point of view of public policy, although the effect is short term, ‘presenteeism’ also entails longer term risks, both with regards to the health of the employees who work while sick and the health of their fellow workers, who run the risk of becoming infected”, explains Dr Flores.

In fact, it is estimated that, in the United States, people who went to work while infected with H1N1 subsequently passed the disease to as many as 7 million workmates (15% of the 44 million people infected with H1N1) in just three months, at the height of the H1N1 pandemic in 2009. According to Dr Flores, “this evidence shows just how important and difficult it is to design health and employment policies that promote the efficient allocation of human resources in the job market. These policies, along with those that ensure an optimal level of work absences due to illness, can increase future employment and reduce dependency on work absence systems”.

Oxford Economic Papers is a general economics journal that publishes refereed papers in fields such as economic theory, applied economics, econometrics and the history of economic thought. It occasionally publishes survey articles in addition to original papers.