The Impact of Education and Occupation on Temporary and Permanent Work Incapacity

51 Pages Posted: 3 Nov 2012

See all articles by Nabanita Datta Gupta

Nabanita Datta Gupta

Department of Economics and Business, Aarhus University; IZA Institute of Labor Economics

Daniel Lau

Cornell University

Dario Pozzoli

Aarhus University - School of Business and Social Sciences

Abstract

This paper investigates whether education and working in a physically demanding job causally impact temporary work incapacity, i.e. sickness absence, and permanent work incapacity, i.e. the inflow to disability via sickness absence. Our contribution is to allow endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find an independent role of both education and occupation on temporary work incapacity only. Having at least primary education reduces women's (men's) probability of temporary work incapacity by 16% (38%) while working in a physically demanding job increases it by 37% (26%). On the other hand, conditional on sickness absence, the effects of education and occupation on permanent work incapacity are generally insignificant.

Keywords: work incapacity, education, occupation, factor analysis, discrete factor model

JEL Classification: I12, I20, J18, C33, C35

Suggested Citation

Datta Gupta, Nabanita and Lau, Daniel and Pozzoli, Dario, The Impact of Education and Occupation on Temporary and Permanent Work Incapacity. IZA Discussion Paper No. 6963, Available at SSRN: https://ssrn.com/abstract=2170651 or http://dx.doi.org/10.2139/ssrn.2170651

Nabanita Datta Gupta (Contact Author)

Department of Economics and Business, Aarhus University ( email )

Fuglesangs Allé 4
8210 Aarhus V
Denmark
+45 87165207 (Phone)

HOME PAGE: http://pure.au.dk/portal/da/ndg@econ.au.dk

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Daniel Lau

Cornell University

Ithaca, NY 14853
United States

Dario Pozzoli

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

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