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While there is little doubt that the probability of poor health increases with age, and that less healthy people face a more difficult situation on the labour market, the precise relationship between facing the risks of health deterioration and labour market instability is not well understood. Using twelve years of data from the German Socio-Economic Panel the authors study the nature of the relationship between poor health and non-employment on a sample of German men aged 30-59. They propose to model poor health and non-employment as interrelated risks determined within a dynamic structure conditional on a set of individual characteristics.
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