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The Effect of Health Shocks on Individual Labour Supply in Russia

Student: Venera Bagranova

Supervisor: Ekaterina Aleksandrova

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Applied Economics and Mathematical Methods (Master)

Year of Graduation: 2020

This paper provides evidence on the effects of health shocks measured by any negative change in self-assessed health status on employment, personal income, and wage in the Russian population. For the analysis we employ the average treatment effect on the treated (ATET) estimator combined with propensity score and nearest neighbor matching and data from RLMS-HSE for 2000-2018. We find that adverse health shocks are associated with the reduction in the probability of remaining employed by 2%, and 17% and 11% losses in income and wages, respectively. For men the consequences of health shocks are more drastic. Severe health shocks that are measured as a drop in self-assessed health by two or more levels are associated with greater losses, namely, respondents aged 30-45 years old lose approximately 60% of their monthly income in case of severe shocks, at the same time respondents aged 46-72 lose around 35-45% of their wages and 9-10% in the probability to stay employed.

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