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The effect of health on earnings: Quasi-experimental evidence from commuting accidents

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  • Halla, Martin
  • Zweimüller, Martina

Abstract

This paper interprets accidents occurring on the way to and from work as negative health shocks to identify the causal effect of health on labor market outcomes. We argue that in our sample of exactly matched injured and non-injured workers, these health shocks (predominantly impairments in the musculoskeletal system) are quasi-randomly assigned. A fixed-effects difference-in-differences approach estimates a negative and persistent effect on subsequent employment and earnings. After initial periods with a higher incidence of sick leave, injured workers are more likely to be unemployed, and a growing share of them leave the labor market via disability retirement. Injured workers who manage to stay in employment incur persistent earnings losses. The effects are somewhat stronger for sub-groups of workers who are typically less attached to the labor market.

Suggested Citation

  • Halla, Martin & Zweimüller, Martina, 2013. "The effect of health on earnings: Quasi-experimental evidence from commuting accidents," Labour Economics, Elsevier, vol. 24(C), pages 23-38.
    • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:23-38
    DOI: 10.1016/j.labeco.2013.04.006
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    References listed on IDEAS

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    More about this item

    Keywords

    Health; Employment; Earnings;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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