We provide new evidence on households' labor supply responses to fatal and severe nonfatal health shocks in the short run and medium run. To identify causal effects, we leverage administrative data on Danish families and construct counterfactuals using households that experience the same event a few years apart. Fatal events lead to considerable increases in surviving spouses' labor supply, which the evidence suggests is driven by families who experience significant income losses. Nonfatal shocks have no meaningful effects on spousal labor supply, consistent with their adequate insurance coverage. The results support self-insurance as a driving mechanism for the family labor supply responses.
Fadlon, Itzik, and Torben Heien Nielsen.
"Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records."
American Economic Journal: Applied Economics,
Consumer Economics: Empirical Analysis
Intertemporal Household Choice; Life Cycle Models and Saving
Insurance; Insurance Companies; Actuarial Studies
Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
Time Allocation and Labor Supply