Effects Of Health Shocks Research Articles

Effects of Health Shocks on Adult Children's Labor Market Outcomes and Well-Being

Effects of Health Shocks on Adult Children's Labor Market Outcomes and Well-Being

The consequences of health shocks on households: Evidence from China

Unexpected health shocks may bring catastrophic consequences for households. This paper examines the effect of unexpected adverse health shocks on household members' physical and mental health, labor supply, household income and asset, and health behaviors in China by analyzing two nationally representative datasets and adopting a difference-in-differences method augmented with coarsened exact matching. We find that an unexpected health shock results in a discounted out-of-pocket medical expenditure of 16,943 RMB (US$ 2647) over five years for an average household, a reduction of household income per capita of 841 RMB per year (US$ 131, or 6.0% of household annual income per capita), and a loss of net household asset per capita of 13,635 RMB (US$ 2130, or 9.7% of household asset per capita). It raises the probability of an average household applying for public poverty relief allowance by 2.8 percentage points. In addition, we document a strong intra-household spillover effect of health shocks on mental health and health behaviors. A simple back-of-envelope calculation shows that the health shock induces a private cost of 34,966 RMB (US$ 5463) over 5 years for an average household, and incurs a social financial burden of 6066 RMB (US$ 948) in 5 years per household in medical reimbursement and social welfare transfers. At a national scale, the total social burden of health shocks from cardiovascular and cerebrovascular diseases amounts to 1.1 trillion RMB (US$ 172.1 billion) over 5 years.

The effects of health shocks on risk preferences: Do personality traits matter?

Older individuals hold a disproportionate amount of total wealth, and are particularly vulnerable to shocks to health. Accordingly, there is a interest in understanding the extent to which health detriments influence financial choices and portfolio holdings within this group of society. A separate strand of literature has recently focused on the role of non-cognitive skills, and in particular personality traits, in shaping attitudes towards risk. We combine these literatures to explore the extent to which unantici pated shocks to health display heterogeneous impacts on preferences towards financial risk via portfolio investments and stock market participation. We find that health shocks have a negative effect on the level of risk at the household level when men, but not women, experience the shock. Moreover, there appears to be heterogeneity in the response by personality trait. Households where men display dominant traits for neuroticism, extraversion and openness to experience tend to be most affected in investment decisions following a health shock. The household becomes less risk tolerant when the level of neuroticism or openness increases, and more risk tolerant when the level of extroversion of the man increases.

Labour market institutions and long term adjustments to health shocks: Evidence from Italian administrative records

We investigate how labour market institutions shape the labour response to acute cardiovascular shocks in a highly regulated labour market over the long run. Using Italian administrative data that covers the history of employment, social security and hospitalization of workers, we exploit several identification strategies to remove bias from observable and unobservable confounders. Significant reductions in employment and labour income emerge in the short run and persist over time, with no evidence of re-entry in the longer run. No adjustment is detected in working hours or wages for those who maintain employment. While the Disability Insurance (DI) system contributes to insure workers against the consequences of health shocks, we offer new evidence on the value of employment protective institutions in strengthening unhealthy workers’ labour inclusion, in particular for blue-collar workers.

Health Shocks and Coping Mechanisms in North Central Nigeria: The Gender Perspective

Introduction: Reliance on out-of-pockets (OOP) payments for health services has continued to hamper access to quality healthcare across Nigeria. Socio-demographic and socio-economic characteristics of the gender of the household head as it influences and impacts health shocks and OOP payments have received very little attention globally. This study investigated the gender perspective on health shocks, health expenditures and coping mechanisms in North Central, Nigeria. Methods: This is a cross-sectional analytical study involving both quantitative and qualitative data collection methods. A total of 1,192 households were studied using multi-stage sampling technique in both rural and urban communities in North Central, Nigeria. Data was analysed with SPSS version 20, and qualitative analysis was done by thematic analysis. Results: The finding showed that 458 (38.4%) of the respondents were female-headed households (FHHs). Female-headed households were less educated, earned lower income, resided more in rural communities and were less insured than male-headed households (MHHs). Health shocks were higher among the FHHs and they also pay higher percentage of their household expenditure for healthcare through higher OOP payments. Also, more FHHs experienced Catastrophic Health Expenditure (CHE) and reported effects of health shocks on reduction in food consumption and loss of income than MHHs. Age, income, occupation and household size are all factors that influenced health shocks in this study. Conclusions: Innovative ways to financially protect women must be employed, to close up the equity gap and bring Nigeria closer to achieving UHC.

Effects of Health Shocks, Insurance, and Education on Income: Fresh Analysis Using CHNS Panel Data.

The most important asset for a person is their health and wellbeing. While it is possible to keep one’s health at its best, it is common for people to have health shocks (HSs; negative shocks to an individual’s health). In this study, using Chinese Health and Nutrition Survey (CHNS) panel data, we studied the impact of different HSs on income using new modified methods. Thus, we considered the substantial links among different HSs, levels of education, and insurance types, as well as their impact on people’s wealth defined by their income. The core aim of this study is to help devise and guide new policies to reduce the effect of these HSs through the proper use of education and insurance channels. In this research, we used simple pooled OLS regression to measure the different causality estimates of HSs, education, and insurance, as well as their interactions. Obtained through the use of up-to-date panel data, the study results are consistent with previous research using different HS and education measures. The findings of this research suggest revising previous policies concerning education levels and health insurance schemes.

Coping with the consequences of short-term illness shocks: The role of intra-household labor substitution.

In developing countries where medical infrastructure, service delivery systems, and the markets for health insurance are underdeveloped, one important mechanism to cope with the consequences of health shocks is the intra-household substitution of labor. This paper studies the impact of short-term illness shocks on labor supply and wage earnings of prime-aged individuals using data from agricultural households in India. It also documents the compensating intra-household labor supply responses of other non-ill members of the household. We find that an illness shock reduces an individual's monthly wage earnings by 7.1% via the decline in the individual's days of employment in the labor market. Further, an illness shock to the household head causes a compensating increase in the wage labor supply of the wife. An illness shock to the wife, however, induces the household head to devote more time to domestic activities. The compensating labor supply responses are only partially able to insure the loss in total wage income of the household. Our results indicate that the gender-based specialization of labor weakens in the event of an illness shock.

The effect of health shocks on labour market outcomes in Russia

Abstract This study examines the effects of individual health shocks on labour market outcomes in the Russian Federation during the period 2000–2018. Employing data from the Russia Longitudinal Monitoring Survey—Higher School of Economics, we demonstrate that adverse health shocks have negative consequences for employment, wages, and income. We find that the effects are strongest for males, the less educated, those on lower incomes, those in middle-ranking and professional occupations, and for those experiencing the most severe health shocks. However, consistent with our knowledge of the Russian labour market, we also observe that the wage and income elasticities are considerably higher than the employment elasticities and above those reported for other countries. Understanding how to attenuate the negative labour market consequences associated with health shocks is paramount and we, therefore, consider the potential role that labour, health and social policies can play in mitigating risk.

Echo Effects of Health Shocks: The Intergenerational Consequences of Prenatal and Early-Life Malnutrition during the Great Leap Forward Famine in China

Relatively few studies have examined the ‘echo effect’ of health shocks related to prenatal and early-life malnutrition, that is, whether the legacy of such shocks is transmitted to the next generation. This study addresses this gap by leveraging extreme malnutrition during the Great Leap Forward famine in China, and by examining its intergenerational consequences. Using a difference-in-differences framework, we estimate the effect of the famine on a wide range of outcomes of children of mothers who were exposed in-utero and in early-life including income, education, and employment, indicators that have not been considered in detail before. Using a refined measure of famine exposure at the prefecture level in rural areas, and by exploiting rich data on those directly affected and their children, we find that on average, the famine had negative echo effects on second-generation outcomes. These echo effects are primarily due to adverse impacts on daughters. Mechanisms include impacts of the famine on the human capital of mothers, and suggestive evidence of son preference. Our results withstand a battery of robustness, specification and falsification checks.

Health, wealth, and informality over the life cycle

What is the impact of bad health on labor market trajectories, consumption, and wealth accumulation in a developing country characterized by a large informal sector and strong inequalities? We develop and estimate a heterogeneous agents model with two sectors to quantify the impact of health shocks and to disentangle the channels through which they affect wealth and consumption over the life cycle in South Africa. We show that the effects of health shocks are significant and strongly depend on the job status of individuals. For formal workers, bad health reduces labor efficiency, which translates into lower earnings. For informal workers and the non-employed, the shock lowers the job finding rate and increases job separation into non-employment, which results in a surge in non-employment spells. As the non-employed are more likely to be unhealthy, health shocks generate a vicious circle.

The effects of health shocks on family status: do financial incentives encourage marriage?

This paper asks whether marriage decisions of unmarried mature couples are driven by the prospect of financial advantages for the later widowed after one partner has suffered a serious health shock. We hypothesize that, in contrast to traditional marriage models, such health shocks may induce unmarried couples to obtain economic benefits, such as survivors’ pensions in particular, through marriage in advance of one partner’s death. This question has not yet been studied empirically. Hazard models capturing unobserved effects are applied to longitudinal data of the German Socioeconomic Panel. It turns out that the probability of marriage after male partners’ health shocks can increase significantly depending on the amount of expected survivors’ pensions for the (likely) surviving female partners. In contrast, an increased probability of marriage after health shocks to women (depending on the expected financial benefits to men) was not found. These findings are supported by various robustness checks. Economic and political implications are discussed and the results are placed in an international context.

A bitter epidemic: The impact of the 1918 influenza on sugar production in Java

Research about the economic consequences of past epidemics has mostly focused on the experience of industrialized countries, thus providing little knowledge about the effects of health shocks on developing economies. We fill this gap by studying the impact of the 1918 influenza in Java, with a new dataset on aggregate food production and district-level figures on (i) sugar production, the major export commodity and the predominant source of labour demand; (ii) agricultural and plantation wages, and (iii) annual crude death rates. The mortality impact of the influenza on Java was high, as crude mortality rates doubled in 1918 relative to the preceding years, but its economic impact was mixed. Aggregate food production did not decline, but sugar output did fall in 1919. Indeed, our regional panel data analysis does not establish a direct relationship between regional epidemic mortality variation and sugar output decline. Instead, we hypothesize that economic activity was rediverted towards food production in order to avoid famine that could have resulted from the combined effects of disrupted shipping at the end of the First World War, climatic conditions and the public health crisis. This is supported by both qualitative observations and quantitative evidence suggesting that those regions that were highly suitable for rice production saw a larger reduction in sugar production, and that in regions that had more flexibility in land tenure arrangements experienced substantially greater reductions in sugar output.

The long-term effects of the Chinese great famine on mental health

ABSTRACT A growing body of studies examined the effects of health shocks during early childhood and in-utero in developing countries. However, the related research on mental health is limited. In this article, we contribute to the existing literature by providing evidence of the long-term effects of the Chinese Great Famine in 1959–1961 on self-reported mental health. Using CHARLS, we find that people who were exposed to the famine in early childhood are more likely to have mental problems. In addition, women are more likely to be impacted by the famine.

Remittances and healthcare expenditure: Human capital investment or responses to shocks? Evidence from Peru

AbstractThis paper estimates the effect of international remittances on healthcare expenditures, taking into account both the interdependence with other consumption goods and the effects of health shocks. More precisely, we assess whether the budget allocation decisions of remittance‐receiving households reveal different preferences to invest in health capital, even when the simultaneous effect that health shocks may have on the demand of remittances and on other types of nondurable expenditures is accounted for. Using data from the “Peruvian National Survey of Households,” we find that remittances have a positive impact on healthcare budget shares, net of the remittance‐related income effect and independently of the occurrance of a health shock. They also have a positive impact on housing and a negative one on other expenditure items, that is, clothing, transport, and education. Hence, our results indicate a “pure” tendency of remittance‐receiving households to devote larger shares of their budget to health capital investment, rather than to other types of consumption goods.

Health shocks and the added worker effect: a life cycle approach

ABSTRACTThis study analyzes the existence of the added worker effect (AWE) when a male partner suffers a health shock (negative health event), by using the information from the Chilean Social Protection Survey. The health shocks considered in this study are new cases of arthritis, asthma and hypertension. We find that neither asthma nor hypertension diagnosis generates an AWE. In the case of arthritis, the study shows differentiated effects by age cohorts. More specifically, we find that women’s probability of labor force entry over three years increases by 50 percentage points when the husband between the ages of 18–44 is diagnosed with arthritis. This effect disappears in older age groups, which suggests that when studying the effect of health shocks, the differences between life cycle stages should be considered (chronic disabling conditions are an important source of financial risk for young households).

The effects of health shocks on labor market outcomes: evidence from UK panel data

This study examines the link between health shocks and labor market outcomes in the United Kingdom. For sample periods of up to 9 years, I use longitudinal data from the British Household Panel Survey to test how sudden health shocks affect a number of labor market outcomes, such as labor and household income, employment status, and hours worked. Additionally, the study examines potential mechanisms underlying the link between health declines and labor market outcomes. By estimating propensity score matching difference-in-differences models, the study shows that sudden health declines lead to significant and persistent reductions in earnings. The effects are strongest for individuals experiencing severe health shocks, males, individuals with higher education and those working in managerial jobs. When examining potential channels, I provide evidence that increased health care expenditures and health care usage as well as reduced work productivity can explain the observed effects on labor market outcomes.

The effects of health shocks on life insurance consumption, economic growth, and health expenditure: A dynamic time and space analysis

Using 2004–2013 annual data from 22 countries, this study empirically tests whether changes in perceived health status (i.e., “health shocks”) can affect the impacts otherwise made by economic growth and life insurance growth on health expenditures. We applied the structural time-varying parameter panel vector autoregression model to establish a multinational empirical model and derived four main results. (1) The health shocks variable, represented by perceived health by socioeconomic status, has positive dynamic effects on economic growth, insurance consumption growth, and health expenditure growth. (2) As for the impact of the gross domestic product variable, insurance was found to finance health expenditures in the short term. (3) Under dynamic conditions, at high-income levels, health shocks stimulate economic growth, but at low-income levels, health shocks can make economic growth stagnant; it can also reduce health expenditures. (4) At low-income levels, insurance cannot diversify health shocks. On account of financial crises, there have been structural changes in the global economy, and they affect the relationships among economic growth, insurance consumption, and health expenditures.

The Effects of Health Shocks on Labor Market Outcomes: Evidence from UK Panel Data

This study examines the link between health shocks and labor market outcomes in the United Kingdom. For sample periods of up to seven years, I use longitudinal data from the British Household Panel Survey (BHPS) to test how sudden declines in self-reported health as well as the onsets of health conditions affect a number of labor market outcomes, such as personal income, employment status, and hours worked. The study shows that sudden health declines lead to significant and persistent reductions in earnings, which are only partly driven by reductions in labor force participation. The results suggest that higher out-of-pocket expenditures for health care and reduced work productivity are potential mechanisms through which health shocks affect earnings. The observed income losses are substantially larger for males and for individuals with higher levels of education. Additionally, the study shows that health shocks significantly impact economic stress and uncertainty as well as general well-being.

How Portfolios Evolve after Retirement: Evidence from Australia

Households in many countries reach retirement with lump sums of financial wealth accumulated in defined contribution retirement plans. Retired households need to manage risks and generate income from their savings. We study the dynamics of retirement wealth and portfolio allocation using the three wealth waves of the Household, Income and Labour Dynamics in Australia panel survey. The average retired household maintained or accumulated wealth in 2002–2006 and decumulated in 2006–2010 consistent with trends in financial asset prices. At older ages, households prefer portfolios with less risk and more liquidity, while maintaining ownership of the family home. The probability of households exhausting financial assets increased over the sample, but households who depleted financial wealth did not liquidate their housing wealth at higher rates than other households. In contrast to the USA, the overall effect of health shocks on the wealth of retired Australian households is minimal, but financial shocks have large effects.

How Portfolios Evolve after Retirement: Evidence from Australia

Households in many countries reach retirement with lump sums of financial wealth accumulated in defined contribution (DC) retirement plans. Retired households need to manage risks and generate income from their savings. We study the dynamics of retirement wealth and portfolio allocation using the three wealth waves of the Household, Income and Labour Dynamics in Australia panel survey. The average retired household maintained or accumulated wealth in 2002-06 and decumulated in 2006-10 consistent with trends in financial asset prices. At older ages, households prefer portfolios with less risk and more liquidity, while maintaining ownership of the family home. The probability of households exhausting financial assets increased over the sample but households who depleted financial wealth did not liquidate their housing wealth at higher rates than other households. In contrast to the U.S., the overall effect of health shocks on the wealth of retired Australian households is minimal but financial shocks have large effects.