Health shocks and labour market outcomes: Evidence from The Irish Longitudinal Study on Ageing (TILDA)

Abstract

Using longitudinal data from the Irish Longitudinal Study on Ageing (TILDA), this study examines the link between health shocks and labour market outcomes and provides new evidence based on a post-crisis sample of older workers. We investigate two types of health shocks, objective measures of recent hospitalization and the first onset of a specific chronic condition during the survey period between 2009 and 2018. By adopting an Inverse Probability Weighted Regression Adjustment (IPRWA) method to address selection bias in health events, we find a negative but weak effect of health shocks on labour market outcomes despite a statistically significant association with future health deterioration and healthcare utilisation. The effect varies by shock types, gender and different outcomes, and is relatively larger for females and socioeconomically disadvantaged groups. When examining potential channels, we further consider healthcare entitlements and find some suggestive evidence on the protective effect of public health entitlements on working capacity.

Keywords: Retirement, Older workers, Health shocks, Healthcare entitlements

JEL Classification: J14, J21, J26