Schooling, Self-Selection, and Health

Economists have long realized that schooling and good health are strongly positively correlated. Some conclude that schooling has a direct positive effect on the production of good health while others argue that some unobserved variable such as rate of time discount positively affects both health and schooling. This study investigates the validity of alternative explanations for the observed schooling-health correlation. Models are estimated using four different measures of overall health: disability, functional limitations, and systolic and diastolic blood pressures. The results uniformly indicate that the direct effect of schooling on health is more important than the effect of unobservables.