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Life-cycle effects of health risk

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  • Capatina, Elena

Abstract

Health status affects individuals׳ labor supply, asset accumulation and welfare through four main channels: productivity, medical expenditures, time endowments and survival probabilities. Using a life-cycle model calibrated to the U.S. for different education groups, I evaluate the relative importance of each channel and quantify their interactions. The productivity and time endowment channels dominate in importance and the risks implied by them contribute significantly to income inequality and precautionary savings. Health effects are larger for the non-college than college educated and account to a large extent for the lower labor supply and higher reliance on government transfers of the non-college group.

Suggested Citation

  • Capatina, Elena, 2015. "Life-cycle effects of health risk," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 67-88.
  • Handle: RePEc:eee:moneco:v:74:y:2015:i:c:p:67-88
    DOI: 10.1016/j.jmoneco.2015.06.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Svetlana Pashchenko & Ponpoje Porapakkarm, 2016. "Cross-Subsidization in Employer-Based Health Insurance and the Effects of Tax Subsidy Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(3), pages 583-612, September.
    2. Eric French & John Bailey Jones, 2017. "Health, Health Insurance, and Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 383-409, September.
    3. Jiayi Wen, 2018. "Occupational Retirement and Social Security Reform: the Roles of Physical and Cognitive Health," Working Papers 2018-12-04, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    4. Svetlana Pashchenko & Ponpoje (Poe) Porapakkarm & Mariacristina De Nardi, 2017. "The Lifetime Costs of Bad Health," 2017 Meeting Papers 533, Society for Economic Dynamics.
    5. Taiyo Fukai & Hidehiko Ichimura & Kyogo Kanazawa, 2018. "Quantifying Health Shocks Over the Life Cycle," Papers 1801.08746, arXiv.org.
    6. Juergen Jung & Chung Tran, 2017. "Optimal Progressive Income Taxation in a Bewley-Grossman Framework," Working Papers 2017-01, Towson University, Department of Economics, revised Apr 2018.
    7. Svetlana Pashchenko & Ponpoje Porapakkarm, 2013. "Quantitative Analysis of Health Insurance Reform: Separating Regulation from Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 383-404, July.
    8. repec:wly:iecrev:v:58:y:2017:i:4:p:1117-1154 is not listed on IDEAS
    9. repec:eee:hapoch:v1_237 is not listed on IDEAS
    10. Svetlana Pashchenko & Ponpoje Porapakkarm, 2013. "Quantitative Analysis of Health Insurance Reform: Separating Regulation from Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 383-404, July.
    11. Svetlana Pashchenko & Ponpoje Porapakkarm, 2017. "Work Incentives Of Medicaid Beneficiaries And The Role Of Asset Testing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(4), pages 1117-1154, November.
    12. repec:eee:reecon:v:72:y:2018:i:4:p:435-451 is not listed on IDEAS
    13. repec:eee:hapoch:v1_457 is not listed on IDEAS
    14. Keane, Michael & Thakur, Ramna, 2018. "Health care spending and hidden poverty in India," Research in Economics, Elsevier, vol. 72(4), pages 435-451.
    15. FUKAI Taiyo & ICHIMURA Hidehiko & KANAZAWA Kyogo, 2018. "Quantifying Health Shocks over the Life Cycle," Discussion papers 18014, Research Institute of Economy, Trade and Industry (RIETI).
    16. Svetlana Pashchenko & Ponpoje Porapakkarm, 2018. "Reducing Medical Spending of the Publicly Insured: The Case for a Cash-Out Option," Working Papers 2018-080, Human Capital and Economic Opportunity Working Group.
    17. repec:eee:dyncon:v:79:y:2017:i:c:p:126-153 is not listed on IDEAS
    18. Fang, H., 2016. "Insurance Markets for the Elderly," Handbook of the Economics of Population Aging, Elsevier.
    19. Ferreira, Pedro Cavalcanti & Gomes, Diego B.P., 2017. "Health care reform or more affordable health care?," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 126-153.

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