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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. Regina T. Riphahn, 1999. "Income and employment effects of health shocks A test case for the German welfare state," Journal of Population Economics, Springer, vol. 12(3), pages 363-389.
  2. 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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  7. Fuchs, Victor R., 2004. "Reflections on the socio-economic correlates of health," Journal of Health Economics, Elsevier, vol. 23(4), pages 653-661, July.
  8. Bénédicte Apouey & Andrew E. Clark, 2013. "Winning big but feeling no better? The effect of lottery prizes on physical and mental health," LSE Research Online Documents on Economics 51570, London School of Economics and Political Science, LSE Library.
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  11. Jonathan Meer & Douglas L. Miller & Harvey S. Rosen, 2003. "Exploring the Health-Wealth Nexus," NBER Working Papers 9554, National Bureau of Economic Research, Inc.
  12. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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  16. 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).
  17. Deaton, A., 1998. "Aging and Inequality in Income and Health," Papers 181, Princeton, Woodrow Wilson School - Development Studies.
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  21. repec:dgr:uvatin:2011143 is not listed on IDEAS
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