Health Shocks and Couples' Labor Supply Decisions
34 Pages Posted: 18 Oct 2004 Last revised: 17 Jul 2022
There are 2 versions of this paper
Health Shocks and Couples' Labor Supply Decisions
Date Written: October 2004
Abstract
Unexpected health events such as a heart attack or new cancer diagnosis are very common for workers in their 50s and 60s. These health shocks can result in a significant loss in family income if the worker reduces labor supply, but the family can also protect itself against this loss if the worker's spouse increases labor supply, generating an "added worker effect." In this paper, I examine the effect of health shocks on the labor supply of both spouses using the Health and Retirement Study (HRS). I find that shocks lead the affected worker to reduce labor supply dramatically, particularly if the shock is accompanied by a loss of functioning. I also find that the added worker effect is small for men and that there is no such effect for women. There is some evidence to suggest that families respond to health shocks in predictable ways depending on characteristics such as access to retiree health insurance. The study concludes that health shocks result in real financial losses for families and are an important source of financial risk for older households.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Spousal Labor Supply as Insurance: Does Unemployment Insurance Crowd Outthe Added Worker Effect?
-
Market Work, Wages, and Men's Health
By Robert Haveman, Mark Stone, ...
-
Early Retirement and Public Disability Insurance Applications: Exploring the Impact of Depression
By Rena M. Conti, Ernst R. Berndt, ...
-
By Richard W. Johnson, Gordon Mermin, ...
-
By Jürgen Maurer and Francis Vella
-
By Jürgen Maurer, Roger W. Klein, ...
-
Medical Care at the End of Life: Diseases, Treatment Patterns, and Costs
By Alan M. Garber, Thomas E. Macurdy, ...
-
Financial Hardship Before and after Social Security's Early Eligibility Age
By Richard W. Johnson and Gordon Mermin
-
Labour Force Participation of the Elderly in Europe: The Importance of Being Healthy
By Adriaan Kalwij and Frederic Vermeulen