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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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    Citations

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    Cited by:

    1. Jolly, Nicholas A. & Theodoropoulos, Nikolaos, 2022. "Health shocks and spousal labor supply: An international perspective," GLO Discussion Paper Series 1086, Global Labor Organization (GLO).
    2. Esteban García-Miralles & Miriam Gensowski, 2020. "Are Children's Socio-Emotional Skills Shaped by Parental Health Shocks?," CEBI working paper series 20-21, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    3. Crego, Julio & Kárpáti, Daniel & Kværner, Jens & Renneboog, Luc, 2022. "The Economic Value of Eliminating Diseases," Other publications TiSEM 8b51764f-3ccd-4bb8-9da1-4, Tilburg University, School of Economics and Management.
    4. Otsu, Yuki & Yuen, C.Y. Kelvin, 2022. "Health, crime, and the labor market: Theory and policy analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    5. Tommaso Colussi & Matteo Romagnoli & Elena Villar, 2022. "The Intended and Unintended Consequences of Taxing Waste," DISCE - Working Papers del Dipartimento di Economia e Finanza def118, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Böckerman, Petri & Kortelainen, Mika & Salokangas, Henri & Vaalavuo, Maria, 2023. "Family Affair? Long-Term Economic and Mental Effects of Spousal Cancer," IZA Discussion Papers 16005, Institute of Labor Economics (IZA).
    7. Lazuka, Volha, 2021. "Heterogeneous Returns to Medical Innovations," Lund Papers in Economic History 225, Lund University, Department of Economic History.
    8. Bhuller, Manudeep & Dahl, Gordon B. & Løken, Katrine V. & Mogstad, Magne, 2022. "Domestic Violence and the Mental Health and Well-being of Victims and Their Children," Discussion Paper Series in Economics 21/2022, Norwegian School of Economics, Department of Economics.
    9. Clò, Stefano & Frigerio, Marco & Vandone, Daniela, 2022. "Financial support to innovation: The role of European development financial institutions," Research Policy, Elsevier, vol. 51(10).
    10. Nicholas A. Jolly & Nikolaos Theodoropoulos, 2023. "Health shocks and spousal labor supply: an international perspective," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 973-1004, April.
    11. Melanie K Jones & Duncan McVicar, 2022. "The dynamics of disability and benefit receipt in Britain [Large sample properties of matching estimators for average treatment effects]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 936-957.
    12. Ida Lykke Kristiansen, 2021. "Consequences of serious parental health events on child mental health and educational outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1772-1817, August.
    13. Annarita Macchioni Giaquinto & Andrew M. Jones & Nigel Rice & Francesca Zantomio, 2022. "Labor supply and informal care responses to health shocks within couples: Evidence from the UK," Health Economics, John Wiley & Sons, Ltd., vol. 31(12), pages 2700-2720, December.
    14. Mauro Laudicella & Paolo Li Donni & Kim Rose Olsen & Dorte Gyrd‐Hansen, 2022. "Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1184-1201, June.
    15. Volha Lazuka, 2022. "Household and individual economic responses to different health shocks: The role of medical innovations," Papers 2206.03306, arXiv.org, revised Nov 2022.
    16. Felix Glaser & Gerald Pruckner, 2022. "A Hard Pill to Swallow? Parental Health Shocks and Children's Mental Health," Economics working papers 2022-15, Department of Economics, Johannes Kepler University Linz, Austria.
    17. Matías Ciaschi, 2020. "Job loss and household labor supply adjustments in developing countries: Evidence from Argentina," CEDLAS, Working Papers 0271, CEDLAS, Universidad Nacional de La Plata.
    18. Simon Rabaté & Julie Tréguier, 2022. "Labor Supply Effects of Survivor Insurance: Evidence from Restricted Access to Survivor Benefits in the Netherlands," CPB Discussion Paper 437, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Eriksen, Tine Louise Mundbjerg & Gaulke, Amanda & Skipper, Niels & Svensson, Jannet & Thingholm, Peter Rønø, 2023. "Educational Consequences of a Sibling's Disability: Evidence from Type 1 Diabetes," IZA Discussion Papers 15988, Institute of Labor Economics (IZA).
    20. Tommaso Colussi & Matteo Romagnoli & Elena Villar, 2022. "The Intended and Unintended Consequences of Taxing Waste," CESifo Working Paper Series 9946, CESifo.
    21. Zocher, Katrin, 2022. "Exiting primary care providers," EconStor Preprints 249041, ZBW - Leibniz Information Centre for Economics.

    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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