Income Volatility, Health and Well-Being

Amelie Adeline (), Ismael Choinière Crèvecoeur (), Raquel Fonseca () and Pierre-Carl Michaud
Additional contact information
Amelie Adeline: University of Cergy-Pontoise
Ismael Choinière Crèvecoeur: University of Québec at Montréal

No 12823, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: While there is mounting evidence that large income shocks, e.g. in the form of a job loss, may impact health and mortality, little evidence exist on the potential relationship between sustained income volatility, keeping average lifetime income constant, and health. This paper exploits rich survey data on the near-elderly in Canada paired with their administrative tax records to investigate whether a relationship exists between health and well-being on the one hand, and individual-specific volatility of income on the other, decomposing volatility into a permanent and transitory component. Controlling for average lifetime income, we find that a one unit increase in the standard deviation of the permanent component of (log) income experienced over the working life is associated with a lower probability of being in excellent (-23.9%) and very good health (-13.3%), to be satisfied with life (-34.9%), and implies the onset of 1.1 additional mental health issues. Similar results, albeit smaller in size, are found for the transitory component of income. These results have potentially important implications for public policy, as well as, understanding the relationship between the labor market and population health.

Keywords: income volatility; health; well-being; Canada (search for similar items in EconPapers)
JEL-codes: C22 D31 I10 I14 I31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-12
New Economics Papers: this item is included in nep-hap and nep-hea
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Related works:
Working Paper: Income Volatility, Health and Well-Being (2020)
Working Paper: Income Volatility, Health and Well-Being (2019)
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