Health Shocks and the Evolution of Consumption and Income over the Life-Cycle

Capatina, Elena; Keane, Michael P.; Maruyama, Shiko

doi:10.2139/ssrn.3278425

Cited by 11 publications

(15 citation statements)

References 78 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Consider a model with a 100% job offer 38 While a decline in health does not reduce wages immediately, it will reduce wages over time through its effect on accumulated work experience. This mechanism was found to be important by Capatina, Keane, and Maruyama (2018). 39 Both future and present marriage market opportunities matter for schooling decisions.…”

Section: Identificationmentioning

confidence: 94%

See 1 more Smart Citation

Career and Family Decisions: Cohorts Born 1935-1975

Eckstein

Keane²,

Lifshitz

2019

Econometrica

View full text Add to dashboard Cite

Comparing the 1935 and 1975 U.S. birth cohorts, wages of married women grew twice as fast as for married men, and the wage gap between married and single women turned from negative to positive. The employment rate of married women also increased sharply, while that of other groups remained quite stable. To better understand these diverse patterns, we develop a life-cycle model incorporating individual and household decisions about education, employment, marriage/divorce, and fertility. The model provides an excellent fit to wage and employment patterns, along with changes in education, marriage/divorce rates, and fertility. We assume fixed preferences, but allow for four exogenously changing factors: (i) mother's education, health, and taxes/transfers; (ii) marriage market opportunities and divorce costs; (iii) the wage structure and job offers; (iv) contraception technology. We quantify how each factor contributed to changes across cohorts. We find that factor (iii) was the most important force driving the increase in relative wages of married women, but that all four factors are important for explaining the many socio-economic changes that occurred in the past 50 years. Finally, we use the model to simulate a shift from joint to individual taxation. In a revenue-neutral simulation, we predict this would increase employment of married women by 9% and the marriage rate by 8.1%.Broadly speaking, employment rates of single men and women, as well as married men, were all fairly stable over the whole 1962 to 2015 period. 2 In contrast, the employment rate of married women doubled from 30% in 1962 to about 60% in 1995, almost approaching that of single men/women. Since 1995, the employment rate of married women has stabilized.The increase in relative wages and employment of married women coincided with an increase in their education relative to singles. But we find education alone cannot explain the increase in married women's relative wages. Selection of women into marriage based on unobserved labor market skills has also gone from strongly negative to positive.The focus of this paper is to unravel the causes of these puzzling differences in trends of wages and employment of married women relative to other demographic groups over the 1962-2015 period by analyzing behavior of cohorts born from the 1930s to the 1970s. Potential explanations include: changing selection into marriage, changing incentives to invest in human capital, increased demand for female labor, changing divorce laws, changes in availability of oral contraception, and home production technology. Thus, to understand the changes in wages and employment that occurred over this period, one needs a model that includes marriage market sorting along with individual and household decisions about education, marriage/divorce, employment, and fertility.Of course, prior literature contains many papers that address some aspects of these phenomena. For example, explanations of why wages/employment of married women have increased include: reduced gender wage discri...

show abstract

Section: Identificationmentioning

confidence: 94%

“…This mechanism was found to be important by Capatina, Keane, and Maruyama (2018). Consider a model with a 100% job offer 38 While a decline in health does not reduce wages immediately, it will reduce wages over time through its effect on accumulated work experience.…”

Section: Identificationmentioning

confidence: 99%

Career and Family Decisions: Cohorts Born 1935-1975

Eckstein

Keane²,

Lifshitz

2019

Econometrica

View full text Add to dashboard Cite

show abstract

“…In fact, the vast majority of life cycle models that account for health consider only a single health index (see French, 2005;French and Jones, 2011;French et al, 2018;Braun et al, 2015;De Nardi et al, 2017;Pashchenko and Porapakkarm, 2013;Aizawa and Fu, 2017, as well as the references in Footnote 24. Exceptions include Capatina et al, 2018, andGustman andSteinmeier, 2014). However, we found that the most commonly used measure of health in structural studies, which assesses whether the respondent has a health condition that limits work, understates the impact of health on labor employment modestly in the HRS and strongly in ELSA relative to our preferred measure.…”

Section: Using the Reduced Form Regressions To Assess Structural Models Of Healthmentioning

confidence: 91%

The Impact of Health on Labor Supply near Retirement

et al. 2021

View full text Add to dashboard Cite

Estimates of how health affects employment vary considerably. We assess how different methods and health measures impact estimates of the impact of health on employment using a unified framework for the US and England. We find that subjective and objective health measures, and subjective measures instrumented by objective measures produce similar estimates when using sufficiently rich objective measures. Moreover, a single health index can capture the relevant health variation for employment. Health deterioration explains up to 15% of the decline in employment between ages 50 and 70. Effects are larger for the US than England, and for the low educated.

show abstract

“…5 Modeling a higher variance of shocks after some event (here birth) can be found in the macro-health literature. For example, in Capatina, Keane, and Maruyama (2017), the variance of income increases after a bad health shock which shifts health from a good to a bad state/regime.…”

Section: Theorymentioning

confidence: 99%

Childbearing postponement, its option value, and the biological clock

Croix¹,

Pommeret

2021

Journal of Economic Theory

View full text Add to dashboard Cite

Having children is like investing in a risky project. Postponing birth is like delaying an irreversible investment. It has an option value, which depends on its costs and benefits, and in particular on the additional risks motherhood brings. We develop a parsimonious theory of childbearing postponement along these lines. We derive its implications for asset accumulation, income, optimal age at first birth, and childlessness. The structural parameters are estimated by matching the predictions of the model to data from the National Longitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth is shown to increase with childbearing, and this increase is stronger for more educated people. This effect alone can explain why the age at first birth and the childlessness rate both increase with education. We use the model to simulate two hypothetical policies. Providing free medically assisted reproduction technology does not affect the age at first birth much, but lowers the childlessness rate. Insuring mothers against income risk is powerful in lowering the age at first birth.

show abstract

Health Shocks and the Evolution of Consumption and Income over the Life-Cycle

Cited by 11 publications

References 78 publications

Career and Family Decisions: Cohorts Born 1935-1975

Career and Family Decisions: Cohorts Born 1935-1975

The Impact of Health on Labor Supply near Retirement

Childbearing postponement, its option value, and the biological clock

Contact Info

Product

Resources

About