The Impact of Poor Health on Wage Losses in China

The aim of the study is to determine the influence of poor health status on wage losses of Chinese people aged over 20. We estimate the average treatment effect on wage losses due to poor health using the Chinese Health and Family Life Survey (CHFLS) data of 3821 individuals. A concern when estimating the effect of (poor) health on wage losses is that health (especially self assessed health) might be endogenous, and in particular that people might use poor health to justify low wages. This would result in the effect of health being inconsistent if health was treated as exogenous. Considering covariate endogeneity and sample selection bias, we use propensity score matching to analyze the average treatment effect of poor health status on wage losses. About 11 percent of wages is estimated to be lost due to poor health status in China.