The effects of sudden health reductions on labor market outcomes: Evidence from incidence of stroke

Abstract While increasing attention is given to how health reductions affect workers, estimating its their effects is usually challenging. This paper aims to identify the causal effect of health deterioration on labor market outcomes by exploiting the incidence of stroke. Stroke, which often reduces health suddenly and unexpectedly, allows us to exploit the within‐person random variation of the timing and isolate the effects of health reduction. By applying the fixed‐effects method to a sample of stroke survivors in the University of Michigan Health and Retirement Study data, I find that stroke immediately halves the employment probability as well as hours and weeks worked 1 year af...

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