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The Impact of Income Shocks on Health: Evidence from Cohort Data

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Author Info
Adda, Jérôme () (University College London)
Banks, James () (Institute for Fiscal Studies, London)
von Gaudecker, Hans-Martin () (Free University of Amsterdam)

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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 a wide range of health measures, but do lead to increases in mortality and risky health behaviour.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3329.

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Length: 35 pages
Date of creation: Jan 2008
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Handle: RePEc:iza:izadps:dp3329

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Related research
Keywords: income shocks health

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Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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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. 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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Cited by:
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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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This page was last updated on 2008-7-21.

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