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The effects of health shocks on labor market outcomes: evidence from UK panel data

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  • Otto Lenhart

    (University of Strathclyde)

Abstract

This study examines the link between health shocks and labor market outcomes in the United Kingdom. For sample periods of up to 9 years, I use longitudinal data from the British Household Panel Survey to test how sudden health shocks affect a number of labor market outcomes, such as labor and household income, employment status, and hours worked. Additionally, the study examines potential mechanisms underlying the link between health declines and labor market outcomes. By estimating propensity score matching difference-in-differences models, the study shows that sudden health declines lead to significant and persistent reductions in earnings. The effects are strongest for individuals experiencing severe health shocks, males, individuals with higher education and those working in managerial jobs. When examining potential channels, I provide evidence that increased health care expenditures and health care usage as well as reduced work productivity can explain the observed effects on labor market outcomes.

Suggested Citation

  • Otto Lenhart, 2019. "The effects of health shocks on labor market outcomes: evidence from UK panel data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(1), pages 83-98, February.
  • Handle: RePEc:spr:eujhec:v:20:y:2019:i:1:d:10.1007_s10198-018-0985-z
    DOI: 10.1007/s10198-018-0985-z
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    Cited by:

    1. Jones, Andrew M. & Rice, Nigel & Zantomio, Francesca, 2020. "Acute health shocks and labour market outcomes: Evidence from the post crash era," Economics & Human Biology, Elsevier, vol. 36(C).
    2. Macchioni Giaquinto, Annarita & Jones, Andrew M. & Rice, Nigel & Zantomio, Francesca, 2021. "Labour supply and informal care responses to health shocks within couples: evidence from the UKHLS," GLO Discussion Paper Series 806, Global Labor Organization (GLO).
    3. David Candon, 2019. "The joint effect of health shocks and eligibility for social security on labor supply," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 969-988, September.
    4. Ekaterina A. Aleksandrova & Venera I. Bagranova & Christopher J. Gerry, 2020. "The Effect Of Health Shocks On Labour Market Outcomes In Russia," HSE Working papers WP BRP 237/EC/2020, National Research University Higher School of Economics.

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    More about this item

    Keywords

    Health shocks; Labor market; Mechanisms; United Kingdom;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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