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THE EFFECT OF HEALTH STATUS ON LABOR FORCE PARTICIPATION IN NIGERIA

Abstract

This study was on the effect of health status on labour force participation in Nigeria. Three objectives were raised which included:  To ascertain the health status affects on the level of participation in the labour force, to ascertain the effect of female health status on labour force participation and to ascertain the effect of male health status on labour force participation . A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected primary schools in Uyo. Hypothesis was tested using Chi-Square statistical tool (SPSS).

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CHAPTER TWO 

REVIEW OF RELATED LITERATURE

2.1 Theoretical Literature Review

Grossman’s (1972, 2000) model on the demand for health exposited on the relationship among individual’s health, human capital and labour force participation. The model built on the Becker’ (1964) model on human capital theory. According to this model, an individual’s health stock determines the total amount of time the individual engaged in labour, while his stock of knowledge determines his market and non-market productivity (Grossman, 2000). According to Becker (1964), an individual’s current health stock depends on past investment made on health and the rate of depreciation of health stock. Health is both consumption and production goods. As consumption goods, it enters into an individual’s utility function given that there is a psychic utility associated with being healthy. As production goods health is an essential input in the production process since it frees up streams of healthy time utilized in producing both health and non-health goods (Novignon, Novignon and Arthur, 2015). However, an individual’s health stock diminishes over time approaching a threshold level where death may occur, but the rate of depreciation may be slowed down through appropriate investment in health, which includes medicare, good dieting, housing facilities and sleep (Grossman, 1972). The pure investment model analyses health capital as an output generated from time allocated to health production, hence good health provides extra time to engage in productive activities that determine income levels over an individual’s lifetime (Novignon Novignon and Arthur, 2015).

Conceptual Issues

Health is a specific feature of a human being, defining to a considerable extent the possibility of using one’s own physical and mental efforts, abilities and experience in the labour market. Similarly, professional development depends on an employee’s health condition. Health belongs to rare goods that are difficult to evaluate. Apart from education and professional experience, health is one of the three most important factors determining the quality of human capital. According to a universal definition of health recommended by, health is not only a complete absence of diseases or disability but also a condition of full physical, mental and social well-being. What should be highlighted within the context of the above definition is that the state of health is defined most of all with the use of a subjective evaluation of one’s well-being rather than with the use of hard quantitative indicators (e.g. blood pressure level). Such a definition of health has certain consequences. Firstly, two hypothetical persons of ‘objectively’ similar health condition (on the basis of results of medical tests) may evaluate their health in two different ways. The ‘burdensomeness’ of health problems stem to a great extent from their subjective perception by a given person. The further consequence of the adopted definition of health is the application of conventional ranges in its measurement. People who enjoy good health are not the ones who have no symptoms (it is nowadays difficult to talk about completely healthy people, taking into account the current level of the diagnostics development), but the ones for whom aches and pains or medical indicators are not obstacles to well-being. There is a correlation between health and professional activity. Both the theory of economics and the empirical research indicate that, as a rule, working people are in better health than those unemployed and professionally inactive. There may be a few ways to explain this. One of them is the positive dependence between income and health condition. Higher income of working people allows them to purchase medical services (including, in particular, in the private sector). In the economic sense, it is assumed that health is something normal. Although it is commonly accepted that healthcare has a limited impact on health, the possibility of using services of higher quality by people who earn more is invaluable. Moreover, work may affect health through non-monetary channels. An important factor that determines the state of health is the broadly understood environment, including work environment. It may have a positive or negative impact on physical health (e.g. noise, harmful chemicals). The health of employees is an important cost factor for firms and a key determinant of the productivity of an economy. Relevant to the concept of health are Life Expectancy, Adult Survival Ratio, and Maternal Mortality. This study adopts Life Expectancy at Birth as the indicator for Nigerians Health Status. Life Expectancy at birth (LE): Life expectancy at birth is defined as number of years a newborn infant could expect to live if prevailing patterns of age-specific mortality rates at the time of birth remains constant throughout the infant’s life. Reporting that health status (Life Expectancy) has a positive relationship with economic growth, earlier studies found that health has a high positive and significant impact on productivity and economic growth. From the Table 1 above, it can be deduced that despite several health reforms, life expectancy has remained low. This depicts Nigeria as a high risk nation to both male and female genders alike. However, females have a slightly higher life expectancy than males. This could be related to the fact that most men are exposed to highly unhealthy jobs coupled with the stress involved in daily operations with minimal healthcare demand. The case for females is otherwise as majorities are engaged in the informal sector specifically trading with lesser exposure to hazards.

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Some Theoretical and Empirical Works on Labour Force Participation

The theoretical outlook on labor force participation reflects how an individual makes choice among alternative uses of his/her time. According to the labour force participation theory, the manner in which individuals allocate their time depends on choices between work and leisure in response to a wage increase (Mincer, 1962). On theoretical grounds, an increase in the individual’s wage rate could lead to (a) the income effect, which is negative, i.e., the increase in income leads to a demand for more leisure and consequent reduction in time allocated to work, (b) the price (or substitution) effect, which is positive, i.e., the rise of wages leads to an allocation of more time to work than to leisure. Therefore, the proportion in which time will be allocated between work and leisure given a change in the wage rate depends on the relative values placed on additional income and on leisure by an individual. However, Mincer (1962) points out that the labor force participation of married women should not be construed only in terms of allocation of time between market work and leisure, since work at home is another activity which most women are engaged in. Therefore, the choices faced by married women can be categorised into three: leisure, work at home and work in the market. In utilizing the labour force participation theory in a developing economy like that of Nigeria, there are issues that require some special attention. First of all, there is a tenuous link between the labor force concepts and the labor force variables often used in empirical studies.

Economic theory assumes that individuals allocate their time between market work and other activities in finely divisible units e.g. hours of work, whereas the actual measured variables are whether an individual is in the labor force or not, whether employed or not, and whether formally and fully employed or works below full-time, among several other factors. Although the theoretical concepts of economic models take into account the family context within which married women participate in the labor force, by treating labor force participation generally as a matter of individuals’ choices under the condition that the real wage increases, many empirical analyses neglect other conditions that are likely to affect an individual’s participation or nonparticipation. To view socio-economic behavior like that of labor force participation as an individual decision-making process is one approach. Another approach is to view such a micro-economic behavior as a household decision-making process. The latter makes the assumption that individual behavioral decisions are made interdependently. It states that they are part of a larger behavioral framework which links the household’s behavior through a process of simultaneous and recursive links. For example, in a household, the school enrolment of children will directly affect employment of mother and vice-versa. If the mother is employed and contributes to household income, it is likely that the household can afford to send the children to school. Conversely, if the children attend school, it is more likely that the mother works because school enrolment will reduce child employment and increase the household income needs (Peek, 1978). This illustrates how a household tends to decide simultaneously on the employment of wife and children’s school enrolment. The labor force participation studies in the developing countries have tried to translate the general propositions of labor force participation in the developed countries into models for empirical work. Attempts have been made to find measurable variables to reflect the determinants of labor force participation by looking at a combination of personal characteristics, among other variables. Such personal characteristics include age, marital status, education, presence of children, household size, wage/income, migration status and health status, among others. Other variables of interest are household characteristics such as relationship to head, husband’s occupation, husband’s income, husband’s employment status-for married women; and the labor market macro-variables such as, the level of unemployment, level of urbanization, type of employment, agricultural employment, proportion of children enrolled in school, and so on (Standing and Sheehan eds., 1978; Magidu 2010).

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Based on the theoretical analyses discussed above, several empirical studies have been conducted in many countries. For example, Aromolaran (2004) examined the influence of education (both own and husband’s) on labor force participation of married women in Nigeria in wage market employment, self-employment and overall labor market participation. The study confirms not only the influence of own education (both bundled and unbundled) on labor force participation, but also that the husband’s education positively influence the labor force participation of married women in Nigeria. The methodology of study relies on the use of linear probability regression model towards the estimation of three labor supply functions on female labor force participation. The results show that own as well as husband’s education at all levels positively influence labor participation in different degrees in wage-, self-, and total employment in Nigeria. Aminu (2010) used the General Household Survey data of 1998/99 and 2007/2008 to estimate the determinants of labor force participation and earnings in wage employment in Nigeria. In the study, Aminu used three models to verify his hypotheses and these models are: the probit model of labor force participation; the multinomial logit models of labor force participation, and the Mincerian human capital model. The contribution of the study to the already vast literature on labor force participation is the inclusion of an important household variable – the presence/absence of an elderly female in the household – which is hypothesized to have a positive effect on both male and female participation rate in the wage employment sector of Nigeria

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