Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records

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We provide new evidence on households' labor supply responses to fatal and severe non-fatal health shocks in the short- and medium-run. To identify causal effects, we leverage administrative data on Danish families and construct counterfactuals using households that experience the same event a few years apart. Fatal events lead to considerable increases in surviving spouses' labor supply, which the evidence suggests is driven by families who experience significant income losses. Non-fatal shocks have no meaningful effects on spousal labor supply, consistent with their adequate insurance coverage. The results support self-insurance as a driving mechanism for the family labor supply responses.
Original languageEnglish
JournalAmerican Economic Journal: Applied Economics
Issue number3
Pages (from-to)1-30
Publication statusAccepted/In press - 2021

ID: 191657802