Health Shocks, Workforce Resilience, and Economic Productivity: Longitudinal Evidence from East Java

Febrian Febrian; Habiba Nabila Ihlasuddini; Muh. Imaduddin Akbar

doi:10.26740/independent.v5i2.72479

Authors

Febrian Febrian State University of Surabaya
Habiba Nabila Ihlasuddini Ristumeikan University
Muh. Imaduddin Akbar State University of Surabaya

DOI:

https://doi.org/10.26740/independent.v5i2.72479

Keywords:

labor force participation, health shocks, gender disparity, East Java

Abstract

This study investigates the relationship between health status, health shocks, and labor force participation in East Java using panel data from the Indonesia Family Life Survey (IFLS) waves 3, 4, and 5. Employing fixed-effects and random-effects logistic regression models, the results show that good self-reported health significantly increases the probability of labor force participation, affirming the economic value of health as human capital. However, health shocks—captured as changes in health condition between waves—do not significantly predict labor market disengagement, indicating possible measurement limitations or labor supply rigidity. The analysis further reveals that the positive effect of good health is substantially weaker for women, suggesting gendered constraints in labor returns to health. Educational attainment consistently predicts labor force participation, reinforcing the complementary role of formal education in economic resilience. These findings contribute to the growing empirical literature on the health–labor nexus in emerging regional economies.

Downloads

Download data is not yet available.

References

Alatas, V., & Newhouse, D. L. (2010). Indonesia Jobs Report Towards Better Jobs and Security for All. www.worldbank.org

Banerjee, A., Duflo, E., Goldberg, N., Karlan, D., Osei, R., Parienté, W., Shapiro, J., Thuysbaert, B., & Udry, C. (2015). A multifaceted program causes lasting progress for the very poor: Evidence from six countries. Science, 348(6236). https://doi.org/10.1126/science.1260799

Becker, G. S. (1962). Investment in Human Capital: A Theoretical Analysis. Journal of Political Economy, 70(5, Part 2), 9–49. https://doi.org/10.1086/258724

Becker, G. S. (2009). Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (Third). University of Chicago Press.

Beckmannshagen, M., & Koenig, J. (2025). Out for good: Transitory and persistent labor market effects of heterogeneous health shocks. Labour Economics, 96, 102747. https://doi.org/10.1016/j.labeco.2025.102747

Blundell, R., Meghir, C., Dias, M. C., & van Reenen, J. (2004). Evaluating the employment impact of a mandatory job search program. Journal of the European Economic Association, 2(4), 569–606. https://doi.org/10.1162/1542476041423368

Bound, J., Schoenbaum, M., Stinebrickner, T. R., & Waidmann, T. (1999). The dynamic effects of health on the labor force transitions of older workers. Labour Economics, 6(2), 179–202. https://doi.org/10.1016/S0927-5371(99)00015-9

BPS. (2024). Indikator Pasar Tenaga Kerja Indonesia Agustus 2024. https://www.bps.go.id/id/publication/2024/12/16/d96c70fc6be192f04edf7fe0/indikator-pasar-tenaga-kerja-indonesia-agustus-2024.html

Cai, L., & Kalb, G. (2006). Health status and labour force participation: Evidence from Australia. Health Economics, 15(3), 241–261. https://doi.org/10.1002/hec.1053

Case, A., & Paxson, C. (2011). The Long Reach of Childhood Health and Circumstance: Evidence from the Whitehall II Study. The Economic Journal, 121(554), F183–F204. https://doi.org/10.1111/j.1468-0297.2011.02447.x

Chamberlain, G. (1980). Analysis of Covariance with Qualitative Data. The Review of Economic Studies, 47(1), 225. https://doi.org/10.2307/2297110

Currie, J., & Madrian, B. (1999). Health, health insurance and the labor market. In O. Ashenfelter & D. Card (Eds.), Handbook of Labor Economics (1st ed., Vols. 3, Part C, pp. 3309–3416). Elsevier. https://EconPapers.repec.org/RePEc:eee:labchp:3-50

Dano, A. M. (2005). Road injuries and long‐run effects on income and employment. Health Economics, 14(9), 955–970. https://doi.org/10.1002/hec.1045

de Ree, J., & Alessie, R. (2011). Life satisfaction and age: Dealing with underidentification in age-period-cohort models. Social Science & Medicine, 73(1), 177–182. https://doi.org/10.1016/j.socscimed.2011.04.008

Dhanani, S., & Islam, I. (2004). Indonesian Wage Structure and Trends, 1976-2000 (First). International Labour Office, Geneva. http://www.ilo.org/ses

Di Meo, G., & Eryilmaz, O. (2025). The impacts of health shocks on household labor supply and domestic production. Journal of Health Economics, 101, 102992. https://doi.org/10.1016/j.jhealeco.2025.102992

Emcet Oktay Tas, Osterreich, S., Tanima Ahmed, Najaf Zahra, & Antonia Milcheva Doncheva. (2024). Ekonomi Perawatan di Indonesia : Jalan Menuju Partisipasi Ekonomi dan Kesejahteraan Perempuan. http://documents.worldbank.org/curated/en/099082824104017623

Filmer, D., & Pritchett, L. H. (2001). Estimating wealth effects without expenditure data—or tears: An application to educational enrollments in states of India. Demography, 38(1), 115–132. https://doi.org/10.1353/dem.2001.0003

Gertler, P., & Gruber, J. (2002). Insuring Consumption Against Illness. American Economic Review, 92, 51–70. https://doi.org/10.1257/000282802760015603

Greene, W. H. . (2012). Econometric analysis. Prentice Hall.

Holt, H. (2010). Health and Labour Force Participation. www.treasury.govt.nz

Jayachandran, S. (2021). Social Norms as a Barrier to Women’s Employment in Developing Countries. IMF Economic Review, 69(3), 576–595. https://doi.org/10.1057/s41308-021-00140-w

Strauss, J., & Thomas, D. (1998). Health, Nutrition, and Economic Development. In Source: Journal of Economic Literature (Vol. 36, Issue 2).

Suryadarma, D., & Yamauchi, C. (2013). Missing public funds and targeting performance: Evidence from an anti-poverty transfer program in Indonesia. Journal of Development Economics, 103, 62–76. https://doi.org/10.1016/j.jdeveco.2013.01.007

Thomas, D., Elizabeth Frankenberg, U., Jed Friedman, U., World Bank Jean-Pierre Habicht, T., Jones, N., Sikoki, B., Teresa Seeman, S., James Smith, U. P., Cecep Sumantri, R., Wayan Suriastini, S., & Siswanto Wilopo, S. (2006). Causal effect of health on labor market outcomes: Experimental evidence.

Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data. MIT Press.