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The Effect of Health on Income: Quasi-Experimental Evidence from Commuting Accidents

  • Martin Halla
  • Martina Zweimüller

This paper interprets accidents occurring on the way to and from work as negative health shocks to identify the causal effect of health on labor market outcomes. We argue that in our sample of exactly matched treated and control workers, these health shocks are quasi-randomly assigned. A fixed-effects difference-in-differences approach estimates a negative and persistent effect on subsequent employment and income. After initial periods with a higher incidence of sick leave, treated workers are more likely unemployed, and a growing share of them leaves the labor market via disability retirement. Those treated workers, who manage to stay in employment, incur persistent income losses. The effects are stronger for sub-groups of workers who are typically less attached to the labor market.

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File URL: http://www.econ.jku.at/papers/2011/wp1104.pdf
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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2011-04.

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Length: 42 pages
Date of creation: Jun 2011
Date of revision: Feb 2012
Handle: RePEc:jku:econwp:2011_04
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Web page: http://www.econ.jku.at/

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  1. Michaud, Pierre-Carl & van Soest, Arthur, 2008. "Health and wealth of elderly couples: Causality tests using dynamic panel data models," Journal of Health Economics, Elsevier, vol. 27(5), pages 1312-1325, September.
  2. Regina T. Riphahn, 1999. "Income and employment effects of health shocks A test case for the German welfare state," Journal of Population Economics, Springer, vol. 12(3), pages 363-389.
  3. Meer, Jonathan & Miller, Douglas L. & Rosen, Harvey S., 2003. "Exploring the health-wealth nexus," Journal of Health Economics, Elsevier, vol. 22(5), pages 713-730, September.
  4. 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).
  5. Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009. "Austrian social security database," IEW - Working Papers 410, Institute for Empirical Research in Economics - University of Zurich.
    • Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009. "Austrian Social Security Database," NRN working papers 2009-03, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  6. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, vol. 24(5), pages 997-1017, September.
  7. Wagstaff, Adam, 2005. "The economic consequences of health shocks," Policy Research Working Paper Series 3644, The World Bank.
  8. Jérome Adda & James Banks & Hans-Martin von Gaudecker, 2007. "The Impact of Income Shocks on Health: Evidence from Cohort Data," MEA discussion paper series 07146, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  9. Fuchs, Victor R., 2004. "Reflections on the socio-economic correlates of health," Journal of Health Economics, Elsevier, vol. 23(4), pages 653-661, July.
  10. Bénédicte H. Apouey & Andrew E. Clark, 2014. "Winning big but feeling no better? The effect of lottery prizes on physical and mental health," PSE Working Papers halshs-00566789, HAL.
  11. Bénédicte Apouey & Andrew E. Clark, 2013. "Winning Big But Feeling No Better? The Effect of Lottery Prizes on Physical and Mental Health," CEP Discussion Papers dp1228, Centre for Economic Performance, LSE.
  12. Schwerdt, Guido & Ichino, Andrea & Ruf, Oliver & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2010. "Does the color of the collar matter? Employment and earnings after plant closure," Economics Letters, Elsevier, vol. 108(2), pages 137-140, August.
  13. repec:pse:psecon:2009-09 is not listed on IDEAS
  14. Stephen Wu, 2003. "The Effects of Health Events on the Economic Status of Married Couples," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
  15. Angus Deaton, 2011. "What does the empirical evidence tell us about the injustice of health inequalities?," Working Papers 1284, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  16. Robert T. Reville & Robert F. Schoeni, 2001. "Disability from Injuries at Work: The Effects on Earnings and Employment," Working Papers 01-08, RAND Corporation Publications Department.
  17. Gardner, Jonathan & Oswald, Andrew J., 2007. "Money and mental wellbeing: A longitudinal study of medium-sized lottery wins," Journal of Health Economics, Elsevier, vol. 26(1), pages 49-60, January.
  18. Wagstaff, Adam, 2007. "The economic consequences of health shocks: Evidence from Vietnam," Journal of Health Economics, Elsevier, vol. 26(1), pages 82-100, January.
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