No Pain, No Gain: The Effects of Exports on Effort, Injury, and Illness

David Hummels, Jakob Munch, Chong Xiang

NBER Working Paper No. 22365
Issued in July 2016, Revised in August 2019
NBER Program(s):Health Economics, International Trade and Investment, Labor Studies

In this paper we address two questions. First, how do changes in demand for work affect workers’ health? Second, how do we translate these health effects into meaningful economic terms so that we can compare the income gains associated with increased demand for work with the pain of adverse health? We combine Danish data on individuals’ health with Danish matched worker-firm data. Within job-spells, we find that as firm sales increases, workers work longer hours and suffer higher incidences of adverse health events, including work-related hospitalizations and increased use of prescription drugs for depression and heart diseases. Tracking worker cohorts over time, we show that the effects of prescription drug uses persist beyond shocks to work demand. We then develop a novel framework to compute the marginal disutility of diseases, and to quantify the average worker’s ex-ante utility loss due to higher rates of sickness. Our approach accommodates moral hazard and does not require the values of structural parameters as inputs. It also provides a straightforward and intuitive extension of VSLI, from mortality and work injury to morbidity. Our marginal-disutility values have sensible and intuitive variation across diseases, and we find that the average worker’s utility loss accounts for almost one fifth of her wage gains from rising firm sales.

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Document Object Identifier (DOI): 10.3386/w22365

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