Wage and labor supply effects of illness in Côte d'Ivoire and Ghana: instrumental variable estimates for days disabled

Abstract

Sickness should make individuals less productive, but there are problems in measuring this effect. First, how is adult morbidity measured in a household survey? Second, how is the impact or morbidity on productivity inferred, if earning is partly used to improve health? Self-reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people. To deal with both the measurement and joint determination problems, an instrumental variable estimation approach is used, where local food prices and health services instrument for disability days that reduce wages by at least 10% and hours by 3% or more.