Comparison the Effects of Health Indicators on Male and Female Labor Supply, Evidence from Panel Data of Eastern Mediterranean Countries 1995-2010

BACKGROUND: Skilled labor force is very important in economic growth. Workers become skilled when they are healthy and able to be educated and work. In this study, we estimated the effects of health indicators on labor supply. We used labor force participation rate as the indicator of labor supply. We categorized this indicator into 2 indicators of female and male labor force participation rates and compared the results of each estimate with the other. METHODS: This study was done in eastern Mediterranean countries between 1995 and 2011. We used a panel cointegration approach for estimating the models. We used Pesaran cross sectional dependency, Pesaran unit root test, and Westerlund panel cointegration for this issue. At the end, after confirmation of having random effect models, we estimated them with random effects. RESULTS: Increasing the fertility rate decreased the female labor supply, but increased the male labor supply. However, public health expenditures increased the female labor supply, but decreased the male labor supply because of substitution effects. Similar results were found regarding urbanization. Gross domestic product had a positive relationship with female labor supply, but not with male labor supply. Besides, out of pocket health expenditures had a negative relationship with male labor supply, but no significant relationships with female labor supply. CONCLUSION: The effects of the health variables were more severe in the female labor supply model compared to the male model. Countries must pay attention to women’s health more and more to change the labor supply.