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The Loss Of Earnings Capability From Disability/Health Limitations: Toward A New Social Indicator

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  • Robert Haveman
  • Barbara Wolfe
  • Lawrence Buron
  • Steven C. Hill

Abstract

Health problems and physical and mental impairments can restrict the kind and amount of work that individuals can perform. Several studies have estimated the loss in earnings experienced by disabled/health‐limited workers, but they do not examine the trend in this loss over time. The authors propose an alternative indicator of productivity loss that is more appropriate for inter temporal comparisons: “lost earnings capability”–the difference between the amount of money persons could potentially earn if they were free of disability/health limitations and the amount of money that they can actually earn given their limitations. The estimates indicate that the mean lost earnings capability per disabled/health‐limited person grew over the period from 1973 to 1988, while the population with disabilities/health limitations fell. In 1973, lost earnings capacity totaled about 5.3 percent of Gross National Product (GNP); by 1988, the loss had fallen to about 4.5 percent of GNP as a consequence of the reduction in the number of people with limitations. Data are from the Current Population Surveys and the Survey of Income and Program Participation.

Suggested Citation

  • Robert Haveman & Barbara Wolfe & Lawrence Buron & Steven C. Hill, 1995. "The Loss Of Earnings Capability From Disability/Health Limitations: Toward A New Social Indicator," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 289-308, September.
    • Handle: RePEc:bla:revinw:v:41:y:1995:i:3:p:289-308
    DOI: 10.1111/j.1475-4991.1995.tb00121.x
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    1. Haveman, Robert H. & Wolfe, Barbara L., 1984. "Disability transfers and early retirement: a casual relationship?," Journal of Public Economics, Elsevier, vol. 24(1), pages 47-66, June.
    2. Parsons, Donald O, 1980. "The Decline in Male Labor Force Participation," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 117-134, February.
    3. Wolfe, Barbara L., 1984. "Measuring disability and health," Journal of Health Economics, Elsevier, vol. 3(2), pages 187-193, August.
    4. Chirikos, Thomas N & Nestel, Gilbert, 1985. "Further Evidence on the Economic Effects of Poor Health," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 61-69, February.
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    Cited by:

    1. William N. Evans & Craig L. Garthwaite, 2014. "Giving Mom a Break: The Impact of Higher EITC Payments on Maternal Health," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 258-290, May.
    2. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    3. Sirois, Catherine, 2020. "The strain of sons' incarceration on mothers’ health," Social Science & Medicine, Elsevier, vol. 264(C).
    4. Maria Prados, 2012. "A Life Cycle Approach to the Mechanism Connecting Health Inequality and Earnings Inequality," 2012 Meeting Papers 1145, Society for Economic Dynamics.
    5. Evans, William N. & Moore, Timothy J., 2011. "The short-term mortality consequences of income receipt," Journal of Public Economics, Elsevier, vol. 95(11), pages 1410-1424.
    6. Stephen E. Snyder & William N. Evans, 2002. "The Impact of Income on Mortality: Evidence from the Social Security Notch," NBER Working Papers 9197, National Bureau of Economic Research, Inc.
    7. Shiv Dixit, 2023. "Contract Enforcement and Preventive Healthcare: Theory and Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 1048-1094, December.

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