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Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records

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  • Itzik Fadlon
  • Torben Heien Nielsen

Abstract

We provide new evidence on households' labor supply responses to fatal and severe nonfatal health shocks in the short run and medium run. To identify causal effects, we leverage administrative data on Danish families and construct counterfactuals using households that experience the same event a few years apart. Fatal events lead to considerable increases in surviving spouses' labor supply, which the evidence suggests is driven by families who experience significant income losses. Nonfatal shocks have no meaningful effects on spousal labor supply, consistent with their adequate insurance coverage. The results support self-insurance as a driving mechanism for the family labor supply responses.

Suggested Citation

  • Itzik Fadlon & Torben Heien Nielsen, 2021. "Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 1-30, July.
    • Handle: RePEc:aea:aejapp:v:13:y:2021:i:3:p:1-30
    DOI: 10.1257/app.20170604
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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