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Disability and Work: The Role of Health Shocks and Childhood Circumstances

Listed author(s):
  • Lindeboom, Maarten

    ()

    (Vrije Universiteit Amsterdam)

  • Llena-Nozal, Ana

    ()

    (OECD)

  • van der Klaauw, Bas

    ()

    (Vrije Universiteit Amsterdam)

This paper focuses on the relation between the onset of disability and employment outcomes. We develop an event history model that includes unscheduled hospitalizations as a measure for unanticipated health shocks and estimate the model on data from the British National Child Development Study (NCDS). We show that such health shocks increase the likelihood of an onset of a disability by around 138%. However, health shocks are relatively rare events and therefore the larger part of observed disability rates result from gradual deteriorations in health. We find no direct effect of health shocks on employment outcomes. Using the health shock as an instrumental variable shows that the onset of a disability at age 25 causally reduces the employment rate at age 40 with around 21 percentage points. Our results show that early childhood conditions are important in explaining adult health and socioeconomic outcomes. Those who have experienced bad conditions during early childhood have higher rates of health deterioration during adulthood, are more likely to become non-employed and suffer from longer spells of non-employment during the course of life.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2096.

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Length: 40 pages
Date of creation: Apr 2006
Handle: RePEc:iza:izadps:dp2096
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  1. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  2. Anne Case & Darren Lubotsky & Christina Paxson, 2001. "Economic Status and Health in Childhood: The Origins of the Gradient," NBER Working Papers 8344, National Bureau of Economic Research, Inc.
  3. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09.
  4. James P. Smith, 2003. "Consequences and predictors of new health events," IFS Working Papers W03/22, Institute for Fiscal Studies.
  5. Janet Currie & Rosemary Hyson, 1999. "Is the Impact of Health Shocks Cushioned by Socioeconomic Status? The Case of Low Birthweight," NBER Working Papers 6999, National Bureau of Economic Research, Inc.
  6. Peter Adams & Michael D. Hurd & Daniel L. McFadden & Angela Merrill & Tiago Ribeiro, 2004. "Healthy, Wealthy, and Wise? Tests for Direct Causal Paths between Health and Socioeconomic Status," NBER Chapters, in: Perspectives on the Economics of Aging, pages 415-526 National Bureau of Economic Research, Inc.
  7. Janet Currie & Mark Stabile, 2003. "Socioeconomic Status and Child Health: Why Is the Relationship Stronger for Older Children?," American Economic Review, American Economic Association, vol. 93(5), pages 1813-1823, December.
  8. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
  9. Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March.
  10. Lindahl, Mikael, 2002. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as Exogenous of Variation in Income," IZA Discussion Papers 442, Institute for the Study of Labor (IZA).
  11. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
  12. Gabriele Doblhammer, 2003. "The late life legacy of very early life," MPIDR Working Papers WP-2003-030, Max Planck Institute for Demographic Research, Rostock, Germany.
  13. repec:pri:cheawb:case_paxson_economic_status_paper is not listed on IDEAS
  14. Fuchs, Victor R., 2004. "Reflections on the socio-economic correlates of health," Journal of Health Economics, Elsevier, vol. 23(4), pages 653-661, July.
  15. Janet Currie & Duncan Thomas, 1999. "Early Test Scores, Socioeconomic Status and Future Outcomes," NBER Working Papers 6943, National Bureau of Economic Research, Inc.
  16. Anne Moller Dano, 2005. "Road injuries and long-run effects on income and employment," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 955-970.
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