The Impact of Health Events on Individual Labor Market Histories: The Message from Difference-in-Differences with Exact Matching

Abstract

We studied the effect of health events (accidents and chronic diseases) on the occupation probabilities at the individual level, while accounting for both correlated individual and time effects. Using difference-in-differences with exact matching estimators, we found that health events have a strong impact on individual labor market histories. The workers affected by a health event have a stronger probability of entering inactivity and a lower probability of keeping their jobs. We also found that the less qualified workers, women and workers with short term jobs are the most negatively affected by health events.

Keywords: health, labor, accidents, chronic diseases, difference in differences, matching

JEL Classification: C14, I10, J20, J60