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The impacts of health shocks on household labor supply and domestic production

Year: 2025

Type: article

Abstract: This paper investigates the impact of severe health shocks on labor supply decisions and domestic production within German households. We draw from the German Socio-Economic Panel (SOEP), focusing on individuals aged 25 to 55 at the time of their first observed health shock. After the health shock, we find that affected individuals suffer a persistent loss in annual gross labor income of around 4,000 euros. This effect results mostly from adjustments at the extensive margin, with labor market participation declining by about 16%. We observe a reduction in full-time employment, but no significant effect on part-time employment. At the household level, a combination of public transfers and added worker effect effectively compensates for the income loss. Finally, individuals experiencing a health shock, particularly women, spend more time on domestic production.

Source: Journal of Health Economics

DOI: 10.1016/j.jhealeco.2025.102992

Authors: Giovanni Di Meo, Onur Eryilmaz

Institution: ETH Zurich

Language: English

Topic: Gender, Labor, and Family Dynamics

Subfield: Gender Studies

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Good health and well-being

Open Access status: hybrid

Estimated APC paid: $4,260