Labour market discrimination on the basis of health: an application to UK data

An analysis of wage discrimination is carried out on the basis of health on UK data with a number of important modifications. First selection is controlled for into both health and labour market status. Second the direct effect of health upon productivity is accounted for and third, discrimination is examined with regard to participation as well as wages. The question of selection into health status is found to be of little empirical importance but taking account of selection into labour market status and the direct impact of health upon productivity leads to a fall in measured discrimination. The paper finds similar results with regard to participation. It is also examined whether these effects differ across age and gender.