Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records
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Itzik Fadlon
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Torben Heien Nielsen
- American Economic Journal: Applied Economics (Forthcoming)
Abstract
We provide new evidence on households' labor supply responses to fatal and severe non-fatal
health shocks in the short- 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. Non-fatal 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.
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