The Effect of Health Shocks on Labour Market Outcomes in Russia

Ekaterina Aleksandrova,Venera Bagranova,Christopher J Gerry

doi:10.2139/ssrn.3727915

Abstract

This paper provides evidence for the effects of health shocks measured by any negative change in self-assessed health (SAH) status on employment, personal income, and wages in the Russian population. We employ the average treatment effect on the treated (ATET) estimator combined with propensity score and nearest neighbour matching and data from Russian Longitudinal Monitoring Survey-HSE (RLMS-HSE) for 2000–2018. We find that adverse health shocks are associated with a reduction in the probability of remaining employed by 2%, and losses of income and wages of 17% and 11%, respectively. For men the consequences of health shocks are more drastic. Severe health shocks that are measured as a drop in SAH by two or more levels are associated with greater losses: respondents aged 30–45 years old lose approximately 60% of their monthly income for severe shocks, and those aged 46–72 lose 35–45% of their wages and 9–10% in the probability of remaining employed.

Highlights

Since the fall of the Soviet Union, Russia has experienced a sustained demographic decline, unprecedented fluctuations in mortality rates and the continuation of a long-term relative deterioration in health, driven by a rapid growth in chronic disease and multimorbidity
In this paper, exploring the Russian case for the first time, we find strong evidence that negative health shocks are associated with considerable reductions in wages and in total income but with more modest employment loss.The 19 rounds of longitudinal data that we explore, using difference-in-difference propensity score matching techniques allow us to establish, with a strong degree of confidence, that the relationship reflects the impact of health changes on labour market experience, rather than the reverse
We have provided the first evidence for the Russian population demonstrating that adverse health shocks have a substantial negative effect on the probability of continuing employment, monthly income, and labour earnings

Summary

Introduction

Since the fall of the Soviet Union, Russia has experienced a sustained demographic decline, unprecedented fluctuations in mortality rates and the continuation of a long-term relative deterioration in health, driven by a rapid growth in chronic disease and multimorbidity These developments have been associated with a precipitous fall in the working-age population (Au et al, 2005), major challenges to the reform of social welfare and the emergence of unconventional labour market institutions accompanying the industrial transformation that has taken place during the last three decades (Lehmann and Muravyev, 2012; Slonimczyk and Gimpelson, 2015). Previous studies have addressed these issues using a wide range of empirical strategies including approaches that: exploit the onset of health conditions (GarcíaGómez, 2011), acute admissions (Mitra et al, 2016) and unplanned hospitalisations (García-Gómez et al, 2013); use accidents and injuries as exogenous health shock variables (Dano, 2005; Zucchelli et al, 2010; Halla and Zweimüller, 2013; Lindeboom et al, 2016) and; treat the incidence of cancer, stroke, or myocardial infarction as evidence of severe health shocks (Gupta et al, 2015; Trevisan and Zantomio, 2016)

Methods

Results

Discussion

Conclusion