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Health and Labor Force Participation in Mexico: A panel data approach

preliminary) We examine the role of changes in health on participation decisions of elderly in Mexico using the Mexican Health and Aging Study (2001-2003). A simultaneous equations model accounts for potential endogeneity of health. Preliminary results with a two-stage estimation method suggest that a better health causes a stronger attachment to the labor market, and finds no evidence that employment affects health. A FIML estimation procedure is being developed, to take the correlation between the labor force participation and health equations into account in a better way.