| dc.description.abstract | Kenya faces a high and rising burden of disease with chronic illness becoming an important
contributor to the disease burden. Health as a capital stock can be expected to affect positively
individual
’
s labo
r sup
ply and labor productivity
, thereby
generating economic benefits. High
disease burden would erode such benefits
yet like many
SSA
countries,
Kenya is relying on its
labor force to achieve
the
projected economic growth
.
Despite
the potential negative labor
market effect of illness and the rising disease burden
in Kenya
,
there is limited empirical
evidence on
the relationship between
self reported
illness,
labor supply and earnings
.
The
purpose of this thesis was to investigate the relationship between illnes
s and three labor market
outcomes: labor force participation, employment status and earnings.
The data are drawn from
a
nationally representative household survey conducted by the Government of Kenya.
In chapter one, the objective was to examine the
e
ffect of illness on individual labor force
participation by gender.
A
standard probit model was estimated.
T
o
control for
potential
endogeneity of the health variable and unobserved individu
al heterogeneity
,
control
function
approach
was employed. The resu
lts
do not reveal evidence on
endogeneity
and
unobserved
heterogeneity
bias. Standard probit estimates indicate
that acute and chronic illnesses
reduce the
likelihood of
labor force participation
. The negative effect
of chronic illness is larger than that
of acute illness.
Bo
th illnesses
reduce the likelihood of
labor force participation
among women
by a larger magnitude than
among
men. The findings imply that illness is a major constraint to
la
bor force participation
in Kenya
. Effective policies and interv
entions to reduce
prevalence
of
chronic and acute illness would bring more Kenyans into the labor force. Moreover such
policies and interventions sho
uld be
targeted
to women.
Chapter two
examined the effect of chronic and acute illness on
individual
’
s
em
ployment status
.
M
ultinomial probit model was estimated
because
the IIA
assumption
underlying the
multinomial logit model
did not hold in the
data used in this thesis
. The
employment states
considered
were
: wag
e employment, agricultural self
-
employment, no
n
-
agricultural self
-
employment and not working.
The results
indicate
d
that
c
hronically ill women
we
re less likely
than non ill women
to be in wage employment and
in agricultural self
-
employment
.
For
men, having chronic illness did
not significantly influen
ce employment status. The results also
indicate
d
t
hat having an acute illness did
not significantly influence employment
status of either
men or women
.
By affecting individual
’
s choice of type of employment, illness affects labor
allocation and reallocati
on with implications for economic transformation and growth.
The
results imply that policies and interventions to reduce incidence of chronic illness would
increase wage employment among women. This is important since
relative to other forms of
employment,
wage employment is associated with higher earnings and benefits
(
such as job
security and health insurance
)
. Such policies and interventions would also increase participation
in agricultural employment.
The objective in chapter three was to investigate
the relationship between illness
and
earnings in
wage employment
, agricultural self
-
employment
and
non
-
agricultural s
elf
-
employment
.
A
control
function approach was
used to ac
count for potential endogeneity and
unobserved
individual heterogeneity
. S
ample
selection bias
was controlled
for
using
a two step approach
suggested by
Bourguignon, Fournier and Gurgand (here after BFG)
.
The results
reveal
evidence
of the three
econometric problems, justifying use of
control function approach
and controlling
for samp
le selection bias
.
Full sample results
indicate
d
that both acu
te and chronic illnesses
have
negative and significant effect on wage employment
earnings
.
In contrast, both illnesses
do not
significantly
affect
earnings in self employment.
When the analysi
s
wa
s done by gender,
only chronic illness significantly affects wage empl
oyment earnings and the effect wa
s larger
for men than
for
women. Public policies and interventions that effectively reduce the incidence
of chronic and acute illness would increase
wage incomes and help in poverty reduction | en_US |
