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The Impact of Aggregate and Idiosyncratic Income Shocks on Health Outcomes: Evidence from the PSID

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  • Timothy Halliday

    ()
    (Department of Economics, University of Hawaii at Manoa
    John A. Burns School of Medicine, University of Hawaii at Manoa)

Abstract

In this paper, we investigate the impact of aggregate and idiosyncratic economic shocks on health using data on self-reported health status and mortality from the Panel Study of Income Dynamics. First, we document a large correlation between poor macroeconomic conditions and mortality for working-aged men. This correlation is robust to controls for baseline health which mitigates concerns that the correlation is the result of selection. There is no relationship between macroeconomic conditions and mortality for women. Next, to better understand how much of this correlation is the result of a causal impact of income shocks on health, we use methods from the literature on dynamic panel data models. Doing this, we find evidence of a causal impact of income shocks on health for working-aged men at the lowest parts of the income distribution. Finally, our analysis provides no evidence that recessions are good for your health.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_06-6.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200606.

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Length: 51 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:hai:wpaper:200606

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Keywords: gradient; recessions; health; dynamic panel data models;

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Cited by:
  1. Timothy Halliday, 2006. "Income Risk and Health," Working Papers 200612, University of Hawaii at Manoa, Department of Economics.
  2. Gregory J. Colman & Dhaval M. Dave, 2011. "Exercise, Physical Activity, and Exertion over the Business Cycle," NBER Working Papers 17406, National Bureau of Economic Research, Inc.

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