The effect of accidents on labor market outcomes: Evidence from Chile

Abstract

We estimate the causal effect of accidents on employment and earnings among Chilean men using event study methods and monthly administrative data. An accident of any type reduces the probability of being employed by 8.4 percentage points in the first year, by 11.2 percentage points in the second year, and by 14.8 percentage points in the third year after the accident. On average, over the three years after the accident, employment declines by 14%, relative to the pre-accident mean. In addition, accidents reduce monthly earnings by around 11% in the first year, 17% in the second year, and 22% in the third year after the accident. On average, monthly earnings fall by 16%, relative to the pre-accident average. Thus, we estimate persistent and increasing labor market effects of accidents over time. These effects vary by individuals' age, education, and industry and by severity of the accident. Our findings imply that the economic consequences of health shocks go beyond direct medical expenses.

Did Medicaid Expansion Reduce Medical Divorce?

“…This also assumes that the sick individual will eventually substantially reduced labor supply (and therefore income) or stop all together when the individual needs to qualify for medical care. This is consistent with the consensus in the literature that health shocks reduce labor supply and earnings (e.g., seeLenhart 2019 andParro andPohl 2021).…”

Accident-Induced Absence from Work and Wage Ladders

“…Fourth, our work relates to the literature on the impact of health shocks on individuals' labor market outcomes (Gallipoli and Turner, 2011;Crichton et al, 2011;Heinesen and Kolodziejczyk, 2013;Halla and Zweimüller, 2013;García-Gómez et al, 2013;Turner and Gallipoli, 2013;Dobkin et al, 2018;Parro and Pohl, 2021;Fadlon and Nielsen, 2021, among many others). This literature generally estimates negative effects of health shocks on employment and earnings, although the estimates vary, partly due to the different types of shocks analyzed.…”

Disability and Labor Market Performance

“…andLenhart (2019) study the effects of a deterioration of self-reported health status Garcia-Gomez et al (2013),Lundborg et al (2015). andDobkin et al (2018) analyze the effects of acute hospitalization, while Moller Dano (2005),Crichton et al (2011),Halla and Zweimüller (2013) andParro and Pohl (2021) look at the impact of accidents and injuries Moran et al (2011),Heinesen and Kolodziejczyk (2013). andJeon (2016) investigate the effects of surviving cancer.…”