Abstract: Exploiting variation in the timing of accidents, we estimate the causal effect of this type of health shock on formal employment among Chilean men. We use administrative data on monthly employment and hospital discharges over a period spanning almost a decade. We find a large and persistent negative effect of accidents on employment. On average, employment in the formal sector declines by about 16 percentage points in the three years following an accident. The initial effect amounts to about –12 percentage points and it steadily increases in absolute value to a level of –20 to –25 percentage points in the third post-accident year. We also find some suggestive evidence that education and health care quality are factors that help mitigate the employment consequences of health shocks.
Media coverage: W.E. Upjohn Institute for Employment Research