Health Shocks, Health Insurance, Human Capital, and the Dynamics of Earnings and Health

Elena Capatina and Michael Keane

Journal of Political Economy, 2026, vol. 134, issue 6, 1714 - 1774

Abstract: We develop a life-cycle model of labor supply and human capital formation that incorporates health shocks, health insurance, and medical treatment decisions. We use the model to study effects of health shocks on health, labor supply, earnings, and earnings inequality. We also simulate provision of public insurance to agents who lack employer-sponsored insurance. While this increases medical spending substantially, it creates positive labor supply incentives for low-skill workers while reducing costs of social insurance, Medicaid, and free care. The net program cost is modest, and all model agents are ex ante better off in a balanced budget simulation.

Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/739831 (application/pdf)
http://dx.doi.org/10.1086/739831 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/739831

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().