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Income Risk and Health

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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

We investigate the impact of exogenous income shocks on health using twenty years of data from the Panel Study of Income Dynamic. To unravel the impact of income on health from unobserved heterogeneity and reverse causality, we employ techniques from the literature on the estimation of dynamic panel data models. Contrary to much of the previous literature on the gradient, we find that, on average, adverse income shocks lead to a deterioration of health. These effects are most pronounced for working-aged men and are dominated by transitions into the very bottom of the earnings distribution. We also provide suggestive evidence of an association between negative income shocks and higher mortality for working-aged men.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_06-12.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 200612.

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Length: 31 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:hai:wpaper:200612

Note: Revised version of WP:06-6, The Impact of Aggregate and Idiosyncratic Income Shocks on Health: Evidence from the PSID
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Keywords: Gradient; Recessions; Health; Dynamic Panel Data Models;

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References

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  2. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  3. Timothy Halliday, 2006. "The Impact of Aggregate and Idiosyncratic Income Shocks on Health Outcomes: Evidence from the PSID," Working Papers 200606, University of Hawaii at Manoa, Department of Economics.
  4. Arellano, M & Carrasco, R, 1996. "Binary Choice Panel Data Models with Predetermined Variables," Papers 9618, Centro de Estudios Monetarios Y Financieros-.
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  7. Halliday, Timothy J., 2007. "Business cycles, migration and health," Social Science & Medicine, Elsevier, vol. 64(7), pages 1420-1424, April.
  8. Jér�me Adda & James Banks & Hans-Martin von Gaudecker, 2009. "The Impact of Income Shocks on Health: Evidence from Cohort Data," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1361-1399, December.
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Citations

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Cited by:
  1. Bhalotra, Sonia, 2010. "Fatal fluctuations? Cyclicality in infant mortality in India," Journal of Development Economics, Elsevier, vol. 93(1), pages 7-19, September.
  2. Timothy J. Halliday, 2007. "Heterogeneity, State Dependence and Health," Working Papers 200716, University of Hawaii at Manoa, Department of Economics.
  3. Timothy J. Halliday, 2006. "Testing for State Dependence with Time-Variant Transition Probabilities," Working Papers 200614, University of Hawaii at Manoa, Department of Economics.

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