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Socioeconomic heterogeneity in the effect of health shocks on earnings: evidence from population-wide data on Swedish workers

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  • Lundborg, Petter

    ()
    (Lunds University)

  • Nilsson, Martin

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

  • Vikström, Johan

    ()
    (Institute for Labout Market Policy Evaluation)

Abstract

In this paper, we test for the existence of socioeconomic heterogeneity in the effect of health shocks on labor market outcomes using register data on the total population of Swedish workers. We estimate fixed effect models and use unexpected hospitalizations as a measure of health shocks. Our results suggest large heterogeneity in the effects, where low educated individuals suffer relatively more from a given health shock. This result holds across a wide range of different health shocks and our results suggest that the heterogeneity increases by age. We test several potential explanations to these results. Extensive sensitivity analyses, including a difference-in-differences matching model, show that our estimates are robust to a number of potential threats. We conclude that socioeconomic heterogeneity in the effect of health shocks offers one explanation to why the socioeconomic gradient in health widens during middle ages.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2011:11.

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Length: 51 pages
Date of creation: 31 Aug 2011
Date of revision:
Handle: RePEc:hhs:ifauwp:2011_011

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Keywords: Health; health shocks; socioeconomic status; life-cycle;

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  1. Hans van Kippersluis & Tom van Ourti & Owen O'Donnell & Eddy van Doorslaer, 2008. "Health and Income across the Life Cycle and Generations in Europe," Tinbergen Institute Discussion Papers 08-009/3, Tinbergen Institute.
  2. Doreen Wing Han Au & Thomas F. Crossley & Martin Schellhorn, 2005. "The Effect of Health Changes and Long-term Health on the Work Activity of Older Canadians," Social and Economic Dimensions of an Aging Population Research Papers 134, McMaster University.
  3. Stewart, Jennifer M., 2001. "The impact of health status on the duration of unemployment spells and the implications for studies of the impact of unemployment on health status," Journal of Health Economics, Elsevier, vol. 20(5), pages 781-796, September.
  4. Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity in self-assessed health: evidence from France," PSE Working Papers halshs-00590524, HAL.
  5. Janet Currie & Brigitte C. Madrian, 1998. "Health, Health Insurance and the Labor Market," JCPR Working Papers 27, Northwestern University/University of Chicago Joint Center for Poverty Research.
  6. van Doorslaer, Eddy & Wagstaff, Adam & Bleichrodt, Han & Calonge, Samuel & Gerdtham, Ulf-G. & Gerfin, Michael & Geurts, Jose & Gross, Lorna & Hakkinen, Unto & Leu, Robert E., 1997. "Income-related inequalities in health: some international comparisons," Journal of Health Economics, Elsevier, vol. 16(1), pages 93-112, February.
  7. Richard Disney & Carl Emmerson & Matthew Wakefield, 2003. "Ill health and retirement in Britain: a panel data based analysis," IFS Working Papers, Institute for Fiscal Studies W03/02, Institute for Fiscal Studies.
  8. Fredriksson, Peter & Johansson, Per, 2008. "Dynamic Treatment Assignment," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 26, pages 435-445.
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Cited by:
  1. Erixson, Oscar, 2014. "Health Responses to a Wealth Shock: Evidence from a Swedish Tax Reform," Working Paper Series 1011, Research Institute of Industrial Economics.
  2. Cervini-Plá, María & Silva, José I. & Vall-Castello, Judit, 2012. "Estimating the Income Loss of Disabled Individuals: The Case of Spain," IZA Discussion Papers 6752, Institute for the Study of Labor (IZA).

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