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Disability and Work: The Role of Health Shocks and Childhood Circumstances

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Author Info
Maarten Lindeboom () (Free University Amsterdam, Tinbergen Institute, HEB, Netspar and IZA Bonn)
Ana Llena-Nozal () (Free University Amsterdam and Tinbergen Institute)
Bas van der Klaauw () (Free University Amsterdam, Tinbergen Institute, Scholar, CEPR and IZA Bonn)

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Abstract

This paper focuses on the relation between the onset of disability and employment outcomes. We develop an event history model that includes unscheduled hospitalizations as a measure for unanticipated health shocks and estimate the model on data from the British National Child Development Study (NCDS). We show that such health shocks increase the likelihood of an onset of a disability by around 138%. However, health shocks are relatively rare events and therefore the larger part of observed disability rates result from gradual deteriorations in health. We find no direct effect of health shocks on employment outcomes. Using the health shock as an instrumental variable shows that the onset of a disability at age 25 causally reduces the employment rate at age 40 with around 21 percentage points. Our results show that early childhood conditions are important in explaining adult health and socioeconomic outcomes. Those who have experienced bad conditions during early childhood have higher rates of health deterioration during adulthood, are more likely to become non-employed and suffer from longer spells of non-employment during the course of life.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2096.

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Length: 40 pages
Date of creation: Apr 2006
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Handle: RePEc:iza:izadps:dp2096

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Related research
Keywords: disability; work; health shocks; event-history model; early childhood;

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Find related papers by JEL classification:
I12 - Health, Education, and Welfare - - Health - - - Health Production
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Anne Case & Darren Lubotsky & Christina Paxson, 2002. "Economic Status and Health in Childhood: The Origins of the Gradient," American Economic Review, American Economic Association, vol. 92(5), pages 1308-1334, December. [Downloadable!]
    Other versions:
  2. Lindahl, Mikael, 2002. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as Exogenous Source of Variation in Income," IZA Discussion Papers 442, Institute for the Study of Labor (IZA). [Downloadable!]
  3. 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.
    Other versions:
  4. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr. [Downloadable!] (restricted)
  5. Gabriele Doblhammer, 2003. "The late life legacy of very early life," MPIDR Working Papers WP-2003-030, Max Planck Institute for Demographic Research, Rostock, Germany. [Downloadable!]
  6. James P. Smith, 2003. "Consequences and Predictors of New Health Events," NBER Working Papers 10063, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Fuchs, Victor R., 2004. "Reflections on the socio-economic correlates of health," Journal of Health Economics, Elsevier, vol. 23(4), pages 653-661, July. [Downloadable!] (restricted)
  8. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring. [Downloadable!] (restricted)
  9. Janet Currie & Duncan Thomas, 1999. "Early Test Scores, Socioeconomic Status and Future Outcomes," NBER Working Papers 6943, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Janet Currie & Rosemary Hyson, 1999. "Is the Impact of Health Shocks Cushioned by Socioeconomic Status? The Case of Low Birthweight," American Economic Review, American Economic Association, vol. 89(2), pages 245-250, May. [Downloadable!] (restricted)
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  11. Adams, Peter & Hurd, Michael D. & McFadden, Daniel & Merrill, Angela & Ribeiro, Tiago, 2003. "Healthy, wealthy, and wise? Tests for direct causal paths between health and socioeconomic status," Journal of Econometrics, Elsevier, vol. 112(1), pages 3-56, January. [Downloadable!] (restricted)
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  12. Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March. [Downloadable!] (restricted)
  13. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09. [Downloadable!] (restricted)
  14. Anne Moller Dano, 2005. "Road injuries and long-run effects on income and employment," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 955-970. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jones, Melanie K. & Latreille, Paul L. & Sloane, Peter J., 2007. "Disability and Work: A Review of the British Evidence," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 25, pages 473-498, Abril. [Downloadable!] (restricted)
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