Abstract
We examine the dynamic relationships between economic status and health measures using data from 8 waves of the Panel Study of Income Dynamics from 1999 to 2013. Health measures are self-rated health (SRH) and functional limitations; economic status measures are labor income (earnings), family income, and net wealth. We use 3 different types of models: (a) ordinary least squares regression, (b) first-difference, and (c) system-generalized method of moment (GMM). Using ordinary least squares regression and first difference models, we find that higher levels of economic status are associated with better SRH and functional status among both men and women, although declines in income and wealth are associated with a decline in health for men only. Using system-GMM estimators, we find evidence of a causal link from labor income to SRH and functional status for both genders. Among men only, system-GMM results indicate that there is a causal link from net wealth to SRH and functional status. Results overall highlight the need for integrated economic and health policies, and for policies that mitigate the potential adverse health effects of short-term changes in economic status.