DP13753 The Economic Consequences of Hospitalizations for Older Workers across Countries

Author(s): Corina Mommaerts, Syed Hassan Raza, Yu Zheng
Publication Date: May 2019
Keyword(s): cross-country differences, Health shocks, healthcare system, labor market protection, medical spending, social insurance program
JEL(s): E21, H53, I13, I18
Programme Areas: Labour Economics, Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13753

This paper estimates the effect of hospital admissions among older workers on economic outcomes across countries. We use harmonized longitudinal survey data from the United States, China, and 13 countries in Europe, and follow the event study design of Dobkin, Finkelstein, Kluender and Notowidigdo (2018) to estimate dynamic effects of a hospitalization on out-of-pocket health expenditures, labor market outcomes, social insurance payments, and household income. We find distinctly different patterns across countries. In contrast to the United States, where hospitalizations lead to large health expenditures and decreases in earnings, individuals in Northern and Southern Europe are largely protected from negative economic outcomes. Hospitalizations in China lead to even larger out-of-pocket expenditures as a percent of prior income, but do not negatively affect labor market outcomes. Our results largely align with the differences in generosity across countries in social protection institutions that include health systems, social security programs and labor market regulations.