Acute health shocks and labour market outcomes: evidence from the post crash era

Andrew M. Jones, Nigel Rice, Francesca Zantomio

Research output: Contribution to journalArticleResearchpeer-review

Abstract

We investigate the labour supply response to an acute health shock for individuals of all working ages, in the post crash era, combining coarsened exact matching and entropy balancing to preprocess data prior to undertaking parametric regression. Identification exploits uncertainty in the timing of an acute health shock, defined by the incidence of cancer, stroke, or heart attack, based on data from Understanding Society. The main finding implies a substantial increase in the baseline probability of labour market exit along with reduced hours and earnings. Younger workers display a stronger labour market attachment than older counterparts, conditional on a health shock. Impacts are stronger for women, older workers, and those who experience more severe limitations and impairments. This is shown to be robust to a broad range of approaches to estimation. Sensitivity tests based on pre-treatment outcomes and using future health shocks as a placebo treatment support our identification strategy.

Original languageEnglish
Article number100811
Number of pages17
JournalEconomics and Human Biology
Volume36
DOIs
Publication statusPublished - Jan 2020

Keywords

  • Acute health shocks
  • Labour supply
  • Matching methods
  • Panel data

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