The Use of Propensity Score Matching to Evaluate Health Effect on China Labor Force Participation

The aim of the study is to determine the influence of health status on labor force supply in Chinese people aged over 20. We estimate the average treatment effect on labor force participation of health status using the Chinese Health and Family Life Survey (CHFLS) data of 3821 individuals. A concern when estimating the effect of health on labor supply is that health (especially self assessed health) might be endogenous, and in particular that people might use poor health to justify non- participation. This would result in the effect of health being overestimated if health was treated as exogenous. Considering covariate endogeneity and sample selection bias, we use propensity score matching to analyze the average treatment effect of health status on labor force participation. The result shows that health status significantly affects the individual labor force participation rate of China.