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The effect of health on earnings: Quasi-experimental evidence from commuting accidents

  • Halla, Martin
  • Zweimüller, Martina

This paper interprets accidents occurring on the way to and from work as negative health shocks to identify the causal effect of health on labor market outcomes. We argue that in our sample of exactly matched injured and non-injured workers, these health shocks (predominantly impairments in the musculoskeletal system) are quasi-randomly assigned. A fixed-effects difference-in-differences approach estimates a negative and persistent effect on subsequent employment and earnings. After initial periods with a higher incidence of sick leave, injured workers are more likely to be unemployed, and a growing share of them leave the labor market via disability retirement. Injured workers who manage to stay in employment incur persistent earnings losses. The effects are somewhat stronger for sub-groups of workers who are typically less attached to the labor market.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 24 (2013)
Issue (Month): C ()
Pages: 23-38

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Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:23-38
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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  1. Jonathan Meer & Douglas L. Miller & Harvey S. Rosen, 2003. "Exploring the Health-Wealth Nexus," NBER Working Papers 9554, National Bureau of Economic Research, Inc.
  2. Kerwin Kofi Charles, 2003. "The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
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  7. Mikael Lindahl, 2005. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as an Exogenous Source of Variation in Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  8. Benedicte Apouey & Andrew E. Clark, 2009. "Winning Big but Feeling no Better? The Effect of Lottery Prizes on Physical and Mental Health," Working Papers 2009.96, Fondazione Eni Enrico Mattei.
  9. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, vol. 24(5), pages 997-1017, September.
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  18. Schwerdt, Guido & Ichino, Andrea & Ruf, Oliver & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2010. "Does the color of the collar matter? Employment and earnings after plant closure," Economics Letters, Elsevier, vol. 108(2), pages 137-140, August.
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  20. Gardner, Jonathan & Oswald, Andrew J., 2006. "Money and Mental Wellbeing: A Longitudinal Study of Medium-Sized Lottery Wins," IZA Discussion Papers 2233, Institute for the Study of Labor (IZA).
  21. Adda, Jérôme & Banks, James & Gaudecker, Hans-Martin von, 2008. "The Impact of Income Shocks on Health: Evidence from Cohort Data," IZA Discussion Papers 3329, Institute for the Study of Labor (IZA).
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  24. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
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