The ‘Healthy Worker Effect’: Do Healthy People Climb the Occupational Ladder?

The association between occupational status and health has been taken to reveal the presence of occupational health inequalities. However, that interpretation assumes no influence of health status in climbing the occupational ladder. This paper documents evidence of non-negligible returns to occupation status on health (which we refer as ‘healthy worker effect’). We use a unique empirical strategy that addresses the problem of reverse causality. That is, an instrumental variable strategy using the variation in average health in the migrant’s country of origin, a health measure plausibly not determined by the migrant’s occupational status. Our findings suggest that health status exerts significant effects on occupational status in several dimensions; including having a supervising role, worker autonomy, and worker influence. The effect size of health is larger than that of an upper secondary education.