Workplace Social Capital and Sickness Absence

M. Kamrul Islam and Lorenzo Rocco attack the major issues troubling studies of Social Capital’s (SC) influence on health.

M. Kamrul Islam[1] and Lorenzo Rocco[2]

This research tests the effect of worker cohesion and trust on their health, by limiting moral hazard in claims of sickness when seeking time off, as well as by encouraging good health behaviors. Their rich HUNT data derives from two large surveys in the Helsenseundersokelsen i Nord-Trondelag region in Norway, one done in 1995-97, the other in 2006-2008. These were matched to contain the same workers in both, yielding a final sample 15,493 subjects. Workplace Social Capital (WSC) was assessed from subject responses to questions regarding: support from fellow workers, cohesion and trust among them, and related questions.

Using the rich data, Islam and Rocco attack the major issues troubling studies of Social Capital’s (SC) influence on health: 1. possible bias introduced by endogeneity due to omitted variables; and 2. the issue of causality. To address the endogenity issue they use instrumental variable (IV) approach and apply a two-equation model, one a regression of variables related to WSC but unrelated to health.  Endogeneity is assessed whether the correlation between the unobservable explanatory variables of the two equations is significantly different from zero. If not, bias will be introduced, though clearly unwanted. To check the robustness of the question of causality in the effect of WSC on the level of health they further estimate an IV equation based on the two-stage least squares (2SLS) regression approach.

The careful application of these technical methods they further find reveals that there is endogeneity bias in the results for females, but none for the sample of males. They also measure any difference in results when health is measured by the subject’s health is self-assessed as opposed to when it is appraised by physicians. Unfortunately, they ran into difficulties finding sufficient suitable instrumental variables, and this problem didn’t permit clear results regarding causality. Nevertheless, their careful technical approach detail on endogeneity provides fundamental information on the issue to open it up for more clearly for health economics.

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[1] M. Kamrul Islam, Senior Researcher at NORCE-Norwegian Research Center, and Associate Professor of Economics at the University of Bergen, Norway.

[2] Lorenzo Rocco, Professor of Economics at the University of Padova, Italy.

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