How vulnerable employment and public health quality shape labour productivity: A comparative study of European economies

The relationship between health indicators and labour productivity has been gaining increasing importance as European economies have come to navigate ageing populations, health-related absenteeism, and evolving employment structures. This study investigates how absenteeism, vulnerable employment, and Disability-Adjusted Life Years (DALYs) affect GDP per person employed across 21 European countries from 2000 to 2021. Employing a robust methodological framework – including Two-Way Fixed Effects, Feasible Generalized Least Squares, and Linear Mixed Models – the analysis accounted for heteroscedasticity, unobserved heterogeneity, and the panel structure of the data. The Linear Mixed Model was identified as the most reliable for interpreting outcomes based on model comparison criteria. The findings indicate that a 1% increase in absenteeism is associated with a 0.064% decrease in GDP per person employed. DALYs among older workers (aged 50–69) reduce productivity by 0.657% per 1% increase, while DALYs among younger workers (aged 15–49) show a marginally positive effect of 0.132%. Vulnerable employment has a marginally positive impact of 0.089% per 1% increase. In contrast, a 1% rise in the share of wage and salaried workers contributes to a 2.383% increase in productivity. These findings underscore the importance of strengthening health systems for ageing workers, reducing employment vulnerability, and promoting stable, formal job opportunities to support long-term economic performance.