Health and the Decision to Invest in Education

Abstract

SummaryThe paper analyses the relationship between health and education in a two period human capital framework. The resulting substitution and investment effects between health and advanced training work in opposite direction and leave open questions for the empirical part. As econometric model we use a random effects probit model for panel data. Our data consist of 322 individuals for the two years 2004 and 2006. Thereby, we take into account that self-reported measures of health are usually vulnerable to a reporting bias due to anticipation and measurement errors. Estimation results show a dominant substitution effect between different levels of education, indicating that good health implies higher learning efficiency so that the same income can be achieved with lower investment in advanced training. In contrast, we find a dominant investment effect within an educational level, indicating that better health leads individuals with higher education to invest more in additional training.

Microfinance and the Decision to Invest in Children’s Education

“…In terms of implications for microfinance, the Breen-Goldthorpe theory suggests that the impact of microfinance on the demand for education is likely to be stronger for families from higher classes, since the returns from educational credentials is likely to be higher to the extent that microcredit increases the likelihood of business success. Schneider et al (2007) use data from the German Socio-Economic Panel (SOEP), a representative longitudinal study of private households in Germany to study the effect of health on education. Overall, they find a dominant substitution effect of health on education: good health implies higher learning efficiency so that the same income can be achieved with lower investment in advanced training.…”

Health Behaviour and Health Assessment: Evidence from German Microdata

“…Apart from these three direct effects of labour force participation on health relevant behaviour, opportunity costs of illness rise with labour income, which means that illness reduces current and future earnings. Because of this, the benefits of healthful activities are largest for well-educated people with high labour income [25,26]. 2 Unemployed face lower opportunity costs as being ill is not directly related to actual income but reduces the chances of returning into the labour force.…”

Fostering of health economics in Germany

“…Der Zusammenhang zwischen Gesundheit und Bildung rückt zunehmend in den Fokus der Betrachtungen, insbesondere da der grundlegende Zusammenhang zwischen Bildung, Gesundheit und Gesundheitsverhalten in Deutschland noch wenig untersucht ist [75]. Stark diskutiert wird in der Literatur der Einfluss der Bildung auf die Gesundheit [76].…”