The Impact of Diabetes and Diabetes Management on Labor Productivity: A Genetic IV Approach
- Presenter:
Chair: Michael Grossman; Discussant: Curtis Florence Tue June 6, 2006 10:45-12:15 Room 121
Authors: H. Shelton Brown (shelton.brown@utb.edu), School of Public Health, University of Texas, Jose A Pagan, University of Texas-Pan American, Craig Hanis, School of Public Health, University of Texas
Title: The Impact of Diabetes and Diabetes Management on Labor Productivity: A Genetic IV Approach
Rationale: Diabetes has been shown to have a detrimental impact on employment and labor market productivity, which results in lost work days and lower wages. However, unobservables are correlated with diabetes and labor productivity, leading to endogeneity problems in estimates. Brown, Pagan and Bastida have recently shown that ignoring endogeneity results in an overestimate (underestimate) of the negative impact of diabetes on female (male) employment (2005). With endogeneity addressed, there was no effect of diabetes on female working propensity in their study. It is possible that gender differences in diabetes management, where female diabetics adhere to management better than males, may account for the differential impact of diabetes on labor productivity.
Objective: To determine whether diabetes, when managed, is related to labor productivity by gender.
Methodology: To account for the endogeneity of diabetes, we use family history of diabetes as genetic instrumental variables in determining diabetes. In order to determine the level of self-management, diabetes is interacted with laboratory-measured blood-sugar levels. Note that in our data, diabetes is measured rather than self-reported. Wage equations and working propensity equations are estimated, by gender. The data are from a new random sample from a largely Mexican-American community in Texas on the border of Mexico.
Results: Self-management is an important, but heretofore, unobservable effect in labor supply. Our results are particularly relevant in the case of populations where genetic predisposition has an important role in the etiology of diabetes.
Conclusions: Our results shed light on the reasons for the differential impact of diabetes on male and female labor productivity. Further, our results inform policy-makers about how to allocate health care resources between prevention of diabetes and diabetes management for those already diagnosed with diabetes.
Disclosure information: Nil.
