This paper examines the impact of health status on poverty status, accounting for the endogeneity of health status. Using exogenous measures of health status from the South African Integrated Health Survey, we instrument for health status while allowing for covariation among the unobservables influencing both health and household poverty status. Health status, as captured by the body mass index, is shown to strongly influence poverty status. Households that contain more unhealthy individuals are 60 per cent more likely to be income poor than households that contain fewer unhealthy individuals, and this finding appears invariant to the choice of poverty line.
Keywords: poverty, health production, economic development. JEL codes: I32, I12, O10
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