Coping with Health Shocks and Role of Spouse: Evidence from Japanese Household Panel Survey

Abstract

Hospitalization is a serious health shock that reduces household income. However, income loss is not uniform across households. This study makes a quantitative comparison of income loss caused by hospitalization for two different types of households: married households and single households, using Japanese household panel survey from 2009 to 2020. We find that wife increases her labor supply when her husband is hospitalized and income loss of the household is substantially mitigated. We also find that income loss is largest when single female is hospitalized. Our evidence suggests that added worker effect by the wife of hospitalized husband is quantitatively important.

Keywords: hospitalization, income loss, added worker effect, caregiver effect, random-effects ordered probit model