Health Shocks, Disability and Work
Posted: 22 Jun 2007
Date Written: June 2007
Abstract
This paper focuses on the relation between the onset of disability and employment outcomes. We develop an event history model that includes accidents as a measure for unanticipated health shocks and estimate the model on data from the British National Child Development Study (NCDS). We show that experiencing such a health shock increases the likelihood of an onset of a disability by around 138%. However, health shocks are relatively rare events and therefore the larger part of observed disability rates result from gradual deteriorations in health. We find no direct effect of health shocks on employment outcomes. Using the health shock as an instrumental variable shows that the onset of a disability at age 25 causally reduces the employment rate at age 40 with around 21 percentage points. The effect is stronger for males and for workers with a higher Socio-economic background.
Keywords: disability, work, health shock, causal effect
JEL Classification: I12
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