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Socioeconomic Heterogeneity in the Effect of Health Shocks on Earnings: Evidence from Population-Wide Data on Swedish Workers

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Listed:
  • Lundborg, Petter

    (Lund University)

  • Nilsson, Martin

    (Uppsala University)

  • Vikström, Johan

    (IFAU)

Abstract

In this paper, we estimate socioeconomic heterogeneity in the effect of unexpected health shocks on labor market outcomes, using register-based data on the entire population of Swedish workers. We effectively exploit a Difference-in-Difference-in-Differences design, in which we compare the change in labor earnings across treated and control groups with high and low education levels. If the anticipation effects are similar for individuals with high and low education, any difference in the estimates across socioeconomic groups could plausibly be given a causal interpretation. Our results suggest a large amount of heterogeneity in the effects, in which individuals with a low education level suffer relatively more from a given health shock. These results hold across a wide range of different types of health shocks and become more pronounced with age. Our results suggest that socioeconomic heterogeneity in the effect of health shocks offers one explanation for how the socioeconomic gradient in health arises.

Suggested Citation

  • Lundborg, Petter & Nilsson, Martin & Vikström, Johan, 2011. "Socioeconomic Heterogeneity in the Effect of Health Shocks on Earnings: Evidence from Population-Wide Data on Swedish Workers," IZA Discussion Papers 6121, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6121
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    Cited by:

    1. Asad Islam & Jaai Parasnis, 2022. "Heterogeneous effects of health shocks in developed countries: Evidence from Australia," Southern Economic Journal, John Wiley & Sons, vol. 89(2), pages 471-495, October.
    2. Maria Cervini-Pla & Judit Vall Castelló, 2018. "The earnings and employment losses before entering the disability system," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1111-1128, November.
    3. Maria Cervini-Plá & Jose I. Silva & Judit Vall Castelló, 2016. "Estimating the income loss of disabled individuals: the case of Spain," Empirical Economics, Springer, vol. 51(2), pages 809-829, September.
    4. Oscar Erixson, 2017. "Health responses to a wealth shock: evidence from a Swedish tax reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1281-1336, October.
    5. Anton Nilsson, 2015. "Who suffers from unemployment? The role of health and skills," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    6. Justine Bondoux & Thomas Barnay & Thomas Renaud & Florence Jusot, 2021. "How Does Disability Affect Income? An Empirical Study on Older European Workers," Erudite Working Paper 2021-05, Erudite.

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    More about this item

    Keywords

    health; health shocks; socioeconomic status; life-cycle;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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