A Study On The Impact Of Health On The Labor Supply Behavior Of The Mid-aged And Elderly Of China

According to the common criteria that confirming a country or region whether it steps into aging society or not, China has stepped into aging society and the level of aging population has been increasing since 2000. The data indicates that 65 years old and above population accounts the total population reach 7.0% in 2000 and then the ratio reach 10.1%. With the improvement of medical technology, popularity of medical services, and changes of birth concept, the level of aging population may further deepen. China may face more and more serious labor supply shortages. In recent years, the decline trend of gross working-age population appears. The data indicates that the gross working-age population from 16 to 59 years old has been declining since 2012 and the demographic dividend is disappearing which causes widespread concern from society. A direct impact that aging population structure brings is labor supply shortages that will have an effect on the economic and social development. Consequently, we have to take precautions in order to weaken the negative impact aging population structure causes from the perspective of exploiting elderly human resources.Based on the background mentioned above, this paper analyzed the effect of health on the labor supply behavior of the mid-aged and elderly Chinese in view of Grossman health demand theory and active aging theory. This paper firstly introduced theoretical foundation namely Grossman health demand theory and active aging theory and reviewed the study about the effect of health on the labor supply behavior of the mid-aged and elderly at home and abroad. Secondly, this paper carded the policy about promoting the social participation of the elderly the government promulgated since the founding of the country. Then, this paper empirically analyzed the effect of health on the labor participation and labor supply of the mid-aged and elderly by using IVProbit model and Heckman two-step method respectively. In order to solve endogeneity, this paper tried to set self-reported health status before the age of 15 as an instrumental variable for the current health status by using China Health and Retirement Longitudinal Study base line data gained in 2011. Finally, this paper proposed policy recommendations according to the conclusions.This paper finds that both the probability of labor participation and labor supply time of the mid-aged and elderly decreases with the decline of theirs health status. However, the decreasing extent of the urban mid-aged and elderly is less than that of the rural mid-aged and elderly. Chronic and bad ADL reduce the probability of labor participation and labor supply time of the mid-aged and elderly. Both the probability of labor participation and labor supply time of the mid-aged and elderly who join endowment insurance are higher than those of the mid-aged and elderly who do not join endowment insurance. The probability of labor participation and labor supply time of the rural mid-aged and elderly are higher than those of the urban mid-aged and elderly. Education has a positively effect on the probability of labor participation of the mid-aged and elderly and threshold effect exists. However, the effect of education on the labor supply time of the mid-aged and elderly is not significant.According to the conclusions and actual situation of China, this paper proposes the following recommendations. Firstly, promoting the level of public finance investment for medical insurance to enhance the medical services availability. Secondly, the government departments should establish special funds, promote the level of public finance investment for health infrastructure, and make rational plans so that the density of health infrastructure can be improved. Thirdly, creating a good policy environment for the development of health-endowment industry and paying an effort to the development of health-endowment industry in order to satisfy the growing need for health-endowment services. Fourthly, improving the new rural social endowment insurance for the purpose of heightening the ability of the rural elderly and enhancing health human capital. Fifthly, strengthening health education to urge the mid-aged and elderly to develop health living habits.