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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

    ()
    (Lund University)

  • Nilsson, Martin

    ()
    (Uppsala University)

  • Vikström, Johan

    ()
    (IFAU)

Abstract

In this paper, we estimate socioeconomic heterogeneity in the effect of unexpected health shocks on labor market outcomes, using register-based data on the entire population of Swedish workers. We effectively exploit a Difference-in-Difference-in-Differences design, in which we compare the change in labor earnings across treated and control groups with high and low education levels. If the anticipation effects are similar for individuals with high and low education, any difference in the estimates across socioeconomic groups could plausibly be given a causal interpretation. Our results suggest a large amount of heterogeneity in the effects, in which individuals with a low education level suffer relatively more from a given health shock. These results hold across a wide range of different types of health shocks and become more pronounced with age. Our results suggest that socioeconomic heterogeneity in the effect of health shocks offers one explanation for how the socioeconomic gradient in health arises.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6121.

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Length: 44 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6121

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

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  1. Au, Doreen & Crossley, Thomas F. & Schellhorn, Martin, 2004. "The Effect of Health Changes and Long-Term Health on the Work Activity of Older Canadians," IZA Discussion Papers 1281, Institute for the Study of Labor (IZA).
  2. Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity in self-assessed health: evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 965-981.
  3. 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.
  4. van Kippersluis, Hans & Van Ourti, Tom & O'Donnell, Owen & van Doorslaer, Eddy, 2009. "Health and income across the life cycle and generations in Europe," Journal of Health Economics, Elsevier, vol. 28(4), pages 818-830, July.
  5. Jennifer Stewart, 1999. "The Impact of Health Status on the Duration of Unemployment Spells and the Implications for Studies of the Impact of Unemployment on Health Status," Working Papers 33, National University of Ireland Galway, Department of Economics, revised 1999.
  6. Disney, Richard & Emmerson, Carl & Wakefield, Matthew, 2006. "Ill health and retirement in Britain: A panel data-based analysis," Journal of Health Economics, Elsevier, vol. 25(4), pages 621-649, July.
  7. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  8. Fredriksson, Peter & Johansson, Per, 2008. "Dynamic Treatment Assignment," Journal of Business & Economic Statistics, 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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