When Economic Insecurity Becomes Biological Inequality: Delayed Repair and Lifetime Health Inequality

Zihao Ji and Hongru Zhang

MPRA Paper from University Library of Munich, Germany

Abstract: When do labor-market shocks become lasting health inequality? We develop and estimate a continuous-time lifecycle model of wealth, health, and skill in which medical care combines smooth maintenance with threshold-crossing repair. Adverse wage shocks push financially fragile households toward subsistence, increase toxic labor effort, delay repair, and convert temporary earnings losses into persistent biological damage. Estimated with PSID, MEPS, and RAND HRS data, the model shows that skill-biased technical change generates concentrated lower-tail losses in health, survival, and welfare. A meaningful share of this damage reflects endogenous repair failure, and the mechanism remains visible in a parsimonious general-equilibrium environment.

Keywords: Life-Cycle Model; Continuous Time; Health Capital; Lifetime Inequality; Deaths of Despair; Overwork; Skill-Biased Technical Change (search for similar items in EconPapers)
JEL-codes: E21 I14 I24 J22 J24 (search for similar items in EconPapers)
Date: 2026-03-31
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