Controlling for Endogeneity in the Health-Socioeconomic Status Relationship of the Near Retired

Although there is a strong correlation between health and socioeconomic status (SES), the direction of causation is not empirically clear. This study a uses a two stage methodology to control for endogeneity. Using data from the U.S. Health and Retirement Study, the results show that after controlling for endogeneity, labor force status turns out to be an even more important factor in determining health than in the case where endogeneity is not controlled for. In particular, unemployment generates much higher odds for worse health as measured by both subjective and objective health measures.