Healthcare utilization and labour market responses to health shocks

Abstract

This paper examines the long-term impacts of negative health shocks on healthcare utilization and labour market outcomes by applying a dynamic difference-in-differences estimator to a sample of heart attack and stroke survivors in Taiwan. To investigate who is more affected by these health shocks, we estimate differential effects by age, healthcare utilization, and income. We find that low-income individuals are less likely to survive but more likely to utilize healthcare and remain employed after the health shocks, indicating the existence of a socioeconomic health gradient. Moreover, nonemployed workers are more likely to start working, which could be attributed to increased financial needs following the health shocks. Building upon our empirical findings, we conduct counterfactual assessments to evaluate health-enhancing policies from a social perspective.