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Out for good: Transitory and persistent labor market effects of heterogeneous health shocks

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  • Beckmannshagen, Mattis
  • Koenig, Johannes

Abstract

We propose a novel method to detect and disentangle moderate and severe health shocks in a general population survey based on a data-driven classification of sickness absences and hospitalizations. Both types of shocks are widespread with an annual incidence of about 1.7%, which rises steeply with age. We estimate the effects of both shocks on labor market outcomes and find that severe shocks have more persistent effects on employment (7.5 percentage point reduction), labor income, and household net income. Moderate shocks have transitory effects on employment (2 percentage point reduction), but more long-lasting effects on work hours.

Suggested Citation

  • Beckmannshagen, Mattis & Koenig, Johannes, 2025. "Out for good: Transitory and persistent labor market effects of heterogeneous health shocks," Labour Economics, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:labeco:v:96:y:2025:i:c:s0927537125000715
    DOI: 10.1016/j.labeco.2025.102747
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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