Who keeps on working? The importance of resilience for labour market participation

Background It is widely recognized that individuals’ health and educational attainments, commonly referred to as their human capital, are important determinants for their labour market participation (LMP). What is less recognised is the influence of individuals’ latent resilience traits on their ability to sustain LMP after experiencing an adversity such as a health shock. Aim We investigate the extent to which resilience is independently associated with LMP and moderates the effect of health shocks on LMP. Method We analysed data from two consecutive waves of a Norwegian prospective cohort study. We followed 3,840 adults who, at baseline, were healthy and worked full time. Binary logistic regression models were applied to explain their employment status eight years later, controlling for age, sex, educational attainment, health status at baseline, as well as the occurrences of three types of health shocks (cardiovascular diseases, cancer, psychological problems). Individuals’ resilience, measured by the Resilience Scale for Adults (RSA), entered as an independent variable and as an interaction with the indicators of health shocks. In separate models, we explore the role of two further indicators of resilience; locus of control, and health optimism. Results As expected, health shocks reduce the probability to keep on working full-time. While both the RSA and the two related indicators all suggest that resilience increases the probability to keep on working, we did not find evidence that resilience moderates the association between health shocks and LMP. Conclusion Higher levels of resilience is associated with full-time work as individuals age.

The effect of health shocks on labour market outcomes in Russia

This study examines the effects of individual health shocks on labour market outcomes in the Russian Federation during the period 2000–2018. Employing data from the Russia Longitudinal Monitoring Survey—Higher School of Economics, we demonstrate that adverse health shocks have negative consequences for employment, wages, and income. We find that the effects are strongest for males, the less educated, those on lower incomes, those in middle-ranking and professional occupations, and for those experiencing the most severe health shocks. However, consistent with our knowledge of the Russian labour market, we also observe that the wage and income elasticities are considerably higher than the employment elasticities and above those reported for other countries. Understanding how to attenuate the negative labour market consequences associated with health shocks is paramount and we, therefore, consider the potential role that labour, health and social policies can play in mitigating risk.

Effect of Health Shocks on Poverty Status in South Korea: Exploring the Mechanism of Medical Impoverishment

Background: South Korea has the highest out-of-pocket burden for medical expenses among the Organisation for Economic Co-operation and Development (OECD) member countries and has no formal sickness benefit system, along with United States and Switzerland, greatly increasing the risk of poverty due to a sudden illness. Methods: We identify the causal effect of health shocks on poverty status and explore the mechanisms of medical impoverishment by analyzing longitudinal data from 13 670 households that participated in the representative Korean Welfare Panel Study (KOWEPS) from 2007 to 2016. In this study, we define a health shock as a case in which no household members were hospitalized in the previous year, but together they had more than 30 days of hospitalization in this year. The propensity score matching method was combined with a mediation analysis in this work. Results: The proportion of households in absolute poverty increased by 4.6–8.0 percentage points among households that experienced a health shock compared with matched controls. The selection effects due to health shock were estimated to be 5.6–8.2 percentage points. On average, a sudden hospitalization reduces annual non-medical expenditures and equivalized disposable income by just over 3.2 million KRW (2500 USD) and 1.2 million KRW (1000 USD), respectively. Health shock induces impoverishment after one year through both the medical expense and work capacity pathways, which explain 12.8% and 12.8% of the total effect, respectively. However, when we decompose the mediation effect of a health shock on poverty status after two years, we find that a health shock leads to poverty mainly through labor force nonparticipation (9.9%). Conclusion: Income stabilizing scheme to protect households that experience a health shock should be introduced as a policy alternative to confront the issue of medical impoverishment.

When Income Declines and Morbidity Rises: An Inquiry into Consumption Smoothing in the Transition to Retirement in China

China still relies on out-of-pocket (OOP) medical spending, having a high prevalence of catastrophic payments with large poverty impacts for individuals. Taking age-associated morbidity into account, people of an advanced age encounter health-related income shocks more often than younger cohorts. Exploiting the Harmonized China Health and Retirement Longitudinal Study (CHARLS), I use a fixed effects regression model to investigate whether pensions and health insurance allow for consumption smoothing in the presence of health shocks. I provide suggestive evidence that pensions slightly decrease non-food consumption when health shocks occur. Moreover, health insurance does not seem to completely substitute costly smoothing mechanisms. I record an ongoing trend of increasing OOP spending on hospitalization, with health insurance reducing these by 19 percent. Financial transfers from family members remain an important unofficial insurance channel for households to cope with health shocks.