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Health Shocks and Labour Transitions Across Europe

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  • C. Deiana
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    Abstract

    This paper investigates the relationship between an adverse health shock - limitation in preforming daily activities - and labour market transitions in twenty-six European countries. The European Union Statistics on Income and Living Conditions dataset is used (2007- 2009). Matching techniques are implemented in order to control for the non-experimental nature of the data. The empirical analysis reveals a significant causal effect of the health shock on the likelihood of leaving full-time employment. Individuals who incur an adverse health shock are significantly more likely to transit either into part-time, unemployment or inactive status. The estimated effect, using the pooled European sample, is negative. Nevertheless, the results differ across countries depending on the country-specific social security system. The largest negative effect is found in Romania, Cyprus and Bulgaria, ranging from 31% to 23%, respectively. It is close to zero in Slovakia and Latvia. I argue that these discrepancies are explained through the heterogeneity in social security systems across Europe. Individuals living in countries characterised by higher work incentives, within the integration disability policy, are less likely to drop out from full-time employment after the health shock occurs.

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    File URL: http://crenos.unica.it/crenos/sites/all/modules/pubdlcnt/pubdlcnt.php?file=http://crenos.unica.it/crenos/sites/default/files/WP13-12.pdf&nid=6362
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    Bibliographic Info

    Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 201312.

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    Date of creation: 2013
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    Handle: RePEc:cns:cnscwp:201312

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    Related research

    Keywords: Health Shocks; Labour Market Transitions; matching; Social Security System; EU-SILC;

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    References

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    1. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
    2. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
    3. Berkovec, James & Stern, Steven, 1991. "Job Exit Behavior of Older Men," Econometrica, Econometric Society, vol. 59(1), pages 189-210, January.
    4. Caliendo, Marco & Kopeinig, Sabine, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," IZA Discussion Papers 1588, Institute for the Study of Labor (IZA).
    5. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
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