موسسات، شوک های درمانی و پیامدهای بازار کار در سراسر اروپا

This paper investigates the relationship between health shocks and labour market outcomes in 9 European countries using the European Community Household Panel. Matching techniques are used to control for the non-experimental nature of the data. The results suggest that there is a significant causal effect from health on the probability of employment: individuals who incur a health shock are significantly more likely to leave employment and transit into disability. The estimates differ across countries, with the largest employment effects being found in The Netherlands, Denmark, Spain and Ireland, and the smallest in France and Italy. Differences in social security arrangements help to explain these cross-country differences.

The increase in the rates of recipients of disability support observed during the 1990s in almost all OECD countries has raised concerns about the labour outcomes of people with adverse health (OECD, 2003). The relevant policies often try to satisfy two possibly contradictory goals. On the one hand, they have to guarantee that individuals who are or become disabled do not endure economic hardship, and thus provide some insurance for the potential income losses. On the other hand, they also aim to avoid the exclusion of disabled individuals from the labour market by, among other measures, encouraging participation. Therefore, such policies should be designed to ensure that the incentives to work relative to being unemployed or collecting disability benefits are high. Good evidence on the magnitude of the impact of ill-health and disability on employment is needed in order to re-think the balance between income protection and incentives for labour force withdrawal. This paper aims to provide comparable evidence of the causal effect of ill-health on remaining into employment and transiting into unemployment, disability or retirement for the working-age population of nine European countries. The literature has mostly focused on older workers (Currie and Madrian, 1999). There is evidence from both Europe and North America that worsening health is correlated with an increased likelihood of retirement for individuals over 50 years old (Au et al., 2005, Bound et al., 1999, Disney et al., 2006, Hagan et al., 2009 and Jones et al., 2010). Studies that, like the present one, focus on employment effect of ill-health at younger ages are more scarce. Pelkowski and Berger (2004) use the American Health and Retirement Survey and find that permanent adverse health conditions reduce both wages (8.4% for males and 4.2% for females) and hours worked (6.3% for males and 3.9% for females). Moreover, they found that the decrease in employment and wages is larger for prime-age individuals, as the peak of loss of wages after the onset of a permanent illness occurs at ages 40–49 for males (wages are 12.1% lower) and 30–39 for females (wages are 9.2% lower). García-Gómez et al. (2010) find that general health affects both entries and exits from employment with the magnitude of the effects being similar for younger and older individuals (16–49 compared to 50–64). Two recent studies have used accidents as unforeseen sudden changes to identify the causal effects of health shocks on labour market outcomes. Lindeboom et al. (2006) estimate an event history model for transitions between work and disability states and find that the effects of an accident on employment are not direct, but rather act through the onset of a disability. In addition, they find that the onset of a disability at age 25 reduces the employment rate at age 40 with around 14 percentage points. Dano (2005), using propensity score matching techniques as the present study, finds that there are both short and long run effects on the probability of being employed for Danish males after being injured in a road accident, and that this effect holds even when individuals receiving disability benefits are excluded from the analysis. Using also propensity score matching techniques, García-Gómez and López-Nicolás (2006) analyse the effects of a sudden drop on self-assessed health in Spain on the probability of leaving employment and transiting out to different states for the Spanish population. They find that suffering a health shock decreases by 5% the probability of remaining in employment and increases by 3.5% the probability of transiting into inactivity. Thus previous literature seems to confirm the existence of an effect of health events on labour market outcomes, but there is a lack of consensus on their magnitude. Our contention here is that the international differences in estimated effects partly reflect the emphasis that each country places on the two potentially conflicting goals of protecting income and encouraging participation mentioned above. This paper attempts to contribute to this area of research by estimating the effects of health shocks on a set of labour outcomes for different European countries using an homogeneous dataset and definition across countries, and subsequently relating the differences in estimates to variations in institutional factors across these countries. Estimation of the causal effect of ill-health on labour outcomes is plagued with potential biases (Lindeboom, 2006). The identification strategy is inspired, among others, by Smith James (2004). He uses longitudinal information for representative samples of the US population in order to condition on past health shocks before evaluating current changes in labour status and income. In this paper the best source of longitudinal information on health and socioeconomic characteristics for the European population is used: the European Community Household Panel (1994–2001, hereafter ECHP). We condition on past health and labour status to evaluate the effects of changes in health. We provide evidence on two alternative definitions of health deterioration or health shock: a sudden drop in self-assessed health and the onset of a chronic condition. Following others (Lechner and Vázquez Álvarez, 2004, Frölich et al., 2004, Dano, 2005 and García-Gómez and López-Nicolás, 2006), we match individuals who experience a health shock with others who do not. This paper contributes to the existing literature in several respects. First, it extends the knowledge of the relationship between health and labour outcomes on the working population, using a homogeneous empirical framework for nine European countries (Denmark, Netherlands, Belgium, France, Ireland, Italy, Greece, Portugal and Spain). Second, this homogeneous framework allows us to formulate hypotheses regarding the role of the differences in social security arrangements across these countries in the difference across estimates. To the best of our knowledge there is no other work containing this type of comparative analysis for the countries concerned. In addition, we use two different definitions of ill-health and analyse both the effects on employment of a drop in self-assessed health and the onset of a chronic condition. This provides evidence regarding the relative importance of the health variable chosen in explaining the effects of health on labour outcomes. The results suggest that there is a significant effect of health on the probability of employment: individuals who incur a health shock are significantly more likely to leave employment than those who do not. As expected, differences in the estimates emerge across European countries, with the largest employment effects found in Ireland, The Netherlands, Denmark and Spain, and the smallest in France and Italy. The reduction in the likelihood of employment is paralleled by an increase in the probability of inactivity. This should be a cause for concern, as the outflow from inactivity into work is known to be close to zero (OECD, 2003).

This paper presents evidence suggesting that the occurrence of a health shock has a causal effect on the probability of being in employment. Interestingly, the magnitude of the effect differs across countries. There are two countries (France and Italy) where the point estimate for this effect is not statistically significant. On the other hand, the largest effects exceed 6% in Denmark, The Netherlands, Spain and Ireland. In general, the magnitude of these effects is high in relative terms, because the chances of being non-employed are more than 10% higher compared to the probability that treated individuals would have faced had they not suffered a health shock, and they are even more than 60% higher among the old Danish and the young Dutch. In addition, the subgroup analysis brings out that the probability of leaving employment and transiting into inactivity among the young workers (aged 16–49) is non-negligible. This should be a cause of concern, as the outflow from inactivity is known to be close to zero (OECD, 2003). The results also suggest that the chances of an individual staying in employment after a health shock are affected by the disability policies in his country. For example, in Ireland, one of the countries where the effect of a health shock on the probability of employment is highest, individuals who experience a disability cannot even opt to work part-time if they want to be entitled to disability benefits. The corresponding effect is not significantly different from zero in France and Italy, the two countries that apply the highest mandatory quotas for disabled workers (7% Italy and 6% France). Concerning income adequacy after a health shock, it has been argued (OECD, 2003) that disabled individuals who are employed earn on average as much as non-disabled employed individuals, but they are better off than disabled individuals who do not work. In this context it is unfortunate that some countries have institutional arrangements that are relatively more conducive to withdrawal from the labour force after an individual suffers a health shock. Inevitably not all individuals who suffer a health shock could or should be employed. Many individuals with a short-term health problem may have jobs to return to once they recover from their illness. Other individuals, because of their illness, age or local market characteristics may not be capable to work. However, these results are consistent with the idea that there are individuals whose incentives to remain in the labour market are affected by social security arrangements in a substantial way. In addition, these results also suggests that a health shock tends to reduce activity more in countries where the integration dimension of disability policies is lower (Ireland) than in countries that score high on this dimension (Denmark and The Netherlands). However, the higher likelihood of a transition to unemployment in Denmark and The Netherlands could also be the result of their higher unemployment replacement rates. These results cast some doubt on the view held by, for example, the OECD (2003) that unemployment systems with long benefit periods are likely to reduce the pressure on disability programmes. In particular the results for Belgium are at odds with this notion. Belgians are entitled to an unlimited period of unemployment benefits, so according to the OECD's stylised fact, we should expect them to transit to unemployment after an adverse health shock. However, the estimates show that health shocks cause transitions to inactivity instead. The results also show that, except in Denmark (where individuals can claim early retirement on grounds of an adverse social situation) and Greece (where individuals can retire with full pension at age 55), a health shock has no effect on the probability of retirement. This is not an unexpected result in Ireland and Portugal where individuals need to be unemployed before being able to become early retirees. For these two countries, the significant increases in the probability of reporting inactivity and the non-significant effect on the probability of reporting unemployment after a health shock duly reflect this institutional feature. The health measures used are all based on subjective perceptions, and although the methods used help to minimise the problems of endogeneity, justification bias and unobserved heterogeneity, there could still be some differences across countries in the objective health changes associated with these measures of health shocks. However, any such differences cannot entirely explain the differences in the estimates across countries. An indirect test of the latter assertion is that there is no association between the proportion of treated individuals who report being hampered and the estimated causal effects. For example, in France and Ireland around 8% of the individuals in the treated group defined by a drop in self-assessed health declare to be severely hampered in their daily activities by a chronic physical or mental health problem, illness or disability, but the employment effects discussed earlier are clearly different in these two countries (no effect for France and above 11% in Ireland). In addition, the robustness of the results - both in sign and magnitude - to the two health measures used (drop in self-assessed health and onset of chronic condition) adds further confidence in our two main findings, i.e. (i) the importance of health as a causal determinant of labour market transitions and (ii) the existence of differences in the magnitude of these effects across European countries. The analysis also identifies lines for future research. First, it would be of interest to analyse transitions between the different non-employment states. A specific aim could consist of testing whether individuals transit from unemployment to inactivity and/or to employment once unemployment benefits expire. Another useful avenue of research, in order to assess the relative effects of reintegration policies across countries, would be to try to analyse differences in the outflow from inactivity after individuals recover from their adverse health episodes. Notwithstanding these research needs, the results presented in this paper show that more inspiration is needed in order to avoid the adverse employment effects detected in some European countries. The good news is that there seems to be scope for learning from the experience in neighbouring countries.