Health shocks, labour market outcomes and access to public transfer programs: evidence from Italian administrative data

Abstract

A relatively high consensus has been produced so far by the economic literature on the relationship between individuals’ health and labour market activity, in particular on the existence of a detrimental effect of health shocks on the labour and socioeconomic status. Still, the potential – short and long-term – mechanisms through which the association arises, remain pretty unexplored. By taking different perspectives, the thesis explores the causal relationship between acute health shocks such as cardiovascular diseases and a wide range of labour market outcomes. The socio-economic impact of CVD shocks is of primary importance in the policy agendas since health deterioration (i) significantly increases the present value of current and future public expenditures for health care and medical treatments and (ii), drives people into unemployment, poverty and social exclusion when the country-specific institutional setting does not accommodate their particular needs. The Italian Institutional and economic setting, characterised by a rigid labour market and a high degree of in-job worker protection by European standards, makes the analysis further interesting. Upon this background, the thesis addresses three different research topics. First of all, it studies the role played by the duration of sick leave absence in explaining the continuity of the labour contract that was in place at the time of the CVD shock. Secondly, it addresses the measurement of the long-term effects of acute health shocks on the probability of employment, annual labour income and wages, among other outcomes. Eventually, the last part of the thesis it is devoted to the analysis of how having experienced an acute health shock drives individuals’ choices in terms of Social Security Programs-related decisions, such as early-retirement, DI or unemployment benefits.