Health Shocks, the Added Worker Effect, and Labor Supply in Married Couples: Evidence from South Korea

Kyeongkuk Kim (), Sang-Hyop Lee and Timothy Halliday
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Kyeongkuk Kim: University of Hawaii at Manoa Ministry of Strategy and Finance, Republic of Korea

No 201812, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: We investigate the effects of health shocks on labor supply among Korean married couples. Consistent with previous work, we find that own health shocks have substantial effects on own labor supply at the extensive margin. We also find evidence that spousal health shocks affect own labor supply, particularly, for wives. Specifically, we find that the onset of chronic illness for the husband reduces the probability of the wife exiting the labor force by 9.2 percentage points. This is the added worker effect (AWE). We find larger effects of spousal health shocks for chronic conditions than for acute conditions and accidents possibly because chronic conditions are associated with a smaller need for home care than acute conditions. Finally, we find stronger evidence of the AWE for households with co-residing adult children and for poorer household.

Keywords: health; labor supply; couples (search for similar items in EconPapers)
JEL-codes: I1 J14 J22 J26 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-dem, nep-hea and nep-lab
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Citations: View citations in EconPapers (3)

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