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When Economic Insecurity Becomes Biological Inequality: Delayed Repair and Lifetime Health Inequality

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  • Ji, Zihao
  • Zhang, Hongru

Abstract

When do labor-market shocks become lasting health inequality? We develop and estimate a continuous-time lifecycle model of wealth, health, and skill in which medical care combines smooth maintenance with threshold-crossing repair. Adverse wage shocks push financially fragile households toward subsistence, increase toxic labor effort, delay repair, and convert temporary earnings losses into persistent biological damage. Estimated with PSID, MEPS, and RAND HRS data, the model shows that skill-biased technical change generates concentrated lower-tail losses in health, survival, and welfare. A meaningful share of this damage reflects endogenous repair failure, and the mechanism remains visible in a parsimonious general-equilibrium environment.

Suggested Citation

  • Ji, Zihao & Zhang, Hongru, 2026. "When Economic Insecurity Becomes Biological Inequality: Delayed Repair and Lifetime Health Inequality," MPRA Paper 128530, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128530
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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