NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Health Shocks and Couples' Labor Supply Decisions

Courtney C. Coile

NBER Working Paper No. 10810
Issued in October 2004
NBER Program(s):   AG   LS

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.

download in pdf format
   (217 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (217 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10810

Users who downloaded this paper also downloaded these:
McClellan Health Events, Health Insurance, and Labor Supply: Evidence from the Health and Retirement Survey
Coile w9496 Retirement Incentives and Couples' Retirement Decisions
Parsons w0132 Health, Family Structure, and Labor Supply
Bradley, Neumark, and Motika w17223 The Effects of Health Shocks on Employment and Health Insurance: The Role of Employer-Provided Health Insurance
Eissa w5023 Taxation and Labor Supply of Married Women: The Tax Reform Act of 1986 as a Natural Experiment
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us