Health Shocks and the Evolution of Earnings over the Life-Cycle
The Centre for Health Economics (CHE) is hosting the seminar, ‘Health Shocks and the Evolution of Earnings over the Life-Cycle (with Michael Keane and Skiko Maruyama)’, with insights from Dr Elena Capatina, lecturer in the Research School of Economics at the Australian National University and visiting scholar in the Department of Economics at the University of Pennsylvania.
This paper studies the effects of health on earnings dynamics and inequality over the life cycle. We build and calibrate a life-cycle model with idiosyncratic health, earnings, employment and survival risk where individuals make labour supply and asset accumulation decisions, adding two novel features. First, we model health as a complex multi-dimensional concept. We differentiate between functional health and underlying health risk, temporary vs persistent health shocks, and predictable vs unpredictable shocks. Second, we study the interactions between health and human capital accumulation (learning-by-doing).
A key finding is that medical expenditures and sick days associated with health shocks have a large negative effect on the labour supply of low productivity individuals since these individuals find it optimal to rely on means tested programs. These programs generate a moral hazard effect where individuals (especially those with low productivity who are likely to be eligible) under-invest in human capital. In the absence of out-of-pocket medical expenditures and unpaid sick days associated with health shocks individuals’ have higher labour supply and human capital, higher wage offers and better health. Overall, we find that health shocks account for approximately half of the growth in wage offers inequality over the life cycle.
Visitors are welcome to attend – registration is not required.
We hope to see you there.
Find out more about our seminar series and guest speakers here
Event Details
- Date:
- 14 August 2019 at 12:00 pm – 1:00 pm
- Venue:
- Monash University Caulfield campus, Building H, Level 9, Seminar room H9.21
- Categories:
- Health Economics
Description
The Centre for Health Economics (CHE) is hosting the seminar, ‘Health Shocks and the Evolution of Earnings over the Life-Cycle (with Michael Keane and Skiko Maruyama)’, with insights from Dr Elena Capatina, lecturer in the Research School of Economics at the Australian National University and visiting scholar in the Department of Economics at the University of Pennsylvania.
This paper studies the effects of health on earnings dynamics and inequality over the life cycle. We build and calibrate a life-cycle model with idiosyncratic health, earnings, employment and survival risk where individuals make labour supply and asset accumulation decisions, adding two novel features. First, we model health as a complex multi-dimensional concept. We differentiate between functional health and underlying health risk, temporary vs persistent health shocks, and predictable vs unpredictable shocks. Second, we study the interactions between health and human capital accumulation (learning-by-doing).
A key finding is that medical expenditures and sick days associated with health shocks have a large negative effect on the labour supply of low productivity individuals since these individuals find it optimal to rely on means tested programs. These programs generate a moral hazard effect where individuals (especially those with low productivity who are likely to be eligible) under-invest in human capital. In the absence of out-of-pocket medical expenditures and unpaid sick days associated with health shocks individuals’ have higher labour supply and human capital, higher wage offers and better health. Overall, we find that health shocks account for approximately half of the growth in wage offers inequality over the life cycle.
Visitors are welcome to attend – registration is not required.
We hope to see you there.
Find out more about our seminar series and guest speakers here
Event Contact
- Name
- che-enquiries@monash.edu
- Phone
- Organisation