Health, wealth, and informality over the life cycle - Archive ouverte HAL Access content directly
Journal Articles Journal of Economic Dynamics and Control Year : 2021

Health, wealth, and informality over the life cycle

Abstract

What is the impact of bad health on labor market trajectories, consumption, and wealth accumulation in a developing country characterized by a large informal sector and strong inequalities? We develop and estimate a heterogeneous agents model with two sectors to quantify the impact of health shocks and to disentangle the channels through which they affect wealth and consumption over the life cycle in South Africa. We show that the effects of health shocks are significant and strongly depend on the job status of individuals. For formal workers, bad health reduces labor efficiency, which translates into lower earnings. For informal workers and the non-employed, the shock lowers the job finding rate and increases job separation into non-employment, which results in a surge in non-employment spells. As the non-employed are more likely to be unhealthy, health shocks generate a vicious circle.

Dates and versions

halshs-04204687 , version 1 (12-09-2023)

Identifiers

Cite

Julien Albertini, Xavier Fairise, Anthony Terriau. Health, wealth, and informality over the life cycle. Journal of Economic Dynamics and Control, 2021, 129, pp.104170. ⟨10.1016/j.jedc.2021.104170⟩. ⟨halshs-04204687⟩
28 View
0 Download

Altmetric

Share

Gmail Mastodon Facebook X LinkedIn More