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The impact of income shocks on health: evidence from cohort data

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Author Info
Jerome Adda () (Institute for Fiscal Studies and University College London)
James Banks () (Institute for Fiscal Studies and University College London)
Hans-Martin von Gaudecker

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Abstract

We study the effect of permanent income innovations on health for a prime-aged population. Using information on more than half a million individuals sampled over a twenty-five year period in three different cross-sectional surveys we aggregate data by date-of-birth cohort to construct a 'synthetic cohort' dataset with details of income, expenditure, socio-demographic factors, health outcomes and selected risk factors. We then exploit structural and arguably exogenous changes in cohort incomes over the eighties and nineties to uncover causal effects of permanent income shocks on health. We find that such income innovations have little effects on health, but do affect health behaviour and mortality.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W07/05.

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Length: 32 pp.
Date of creation: Jan 2007
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Handle: RePEc:ifs:ifsewp:07/05

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  1. Christopher J. Ruhm & William E. Black, 2001. "Does Drinking Really Decrease in Bad Times?," NBER Working Papers 8511, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  1. Timothy Halliday, 2007. "Income Volatility and Health," Working Papers 200729, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
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  2. Timothy J. Halliday, 2007. "Income Risk and Health," Working Papers 200710, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
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  3. Timothy J. Halliday, 2007. "Heterogeneity, State Dependence and Health," Working Papers 200716, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
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