[2000] MURRUGARRA, Edmundo; VALDIVIA, Martín. “The returns to health for peruvian urban adults by gender, age, and across the wage distribution”. En: SAVEDOFF, William D. (ed.) ; SCHULTZ, T. Paul (ed.). Wealth from health: linking social investments to earnings in Latin America. Washington, D.C.: BID. p. 151-187.

This chapter analyzes the determinants of health status for urban adults in Peru and estimates the impact of health status on earnings.

Using the reported numbers of days ill as an indicator of an individual’s health status, it was possible to show that household infrastructure and the associated costs of reaching health centers have a significant effect on health. Schooling effects on health are also found important, especially among older people. When the former variables are used as instruments to correct for endogeneity and measurement error in the health variable, health status has a strong and positive impact on wages, especially for males. Using quintile regression techniques, this paper finds that the largest effects of illness on productivity are estimated among those in the bottom of the wage distribution.

The lowest-paid workers have their hourly wages reduced by 3.8 percent due to one day of sickness. Other important effects are found by type of employment, where the effects on the self-employed are larger, especially among the eldest (-4.3 percent).

Private-sector workers have a smaller but significant reduction due to illness (-1.8 percent). These results suggest that the impact on wages is stronger for jobs in which productivity and health are more closely connected or better observed, as in the private sector and among the self-employed.