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

44 Pages Posted: 28 Nov 2011

See all articles by Petter Lundborg

Petter Lundborg

Tinbergen Institute; Lund University School of Economics and Management; IZA Institute of Labor Economics

Martin Nilsson

Uppsala University

Johan Vikström

Uppsala University; IFAU - Institute for Labour Market Policy Evaluation

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.

Keywords: health, health shocks, socioeconomic status, life-cycle

JEL Classification: I10, I12, I14

Suggested Citation

Lundborg, Petter and Lundborg, Petter and Nilsson, Martin and Vikström, Johan, Socioeconomic Heterogeneity in the Effect of Health Shocks on Earnings: Evidence from Population-Wide Data on Swedish Workers. IZA Discussion Paper No. 6121, Available at SSRN: https://ssrn.com/abstract=1965138 or http://dx.doi.org/10.2139/ssrn.1965138

Petter Lundborg (Contact Author)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Lund University School of Economics and Management ( email )

P.O Box 7080
Lund
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Martin Nilsson

Uppsala University

Box 513
Uppsala, 751 20
Sweden

Johan Vikström

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

IFAU - Institute for Labour Market Policy Evaluation

Box 513
751 20 Uppsala
Sweden

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