The economic effects of nonlinear health dynamics: estimates from a dynamic life-cycle model link (with Andrea Moro) (R&R - second round)
previously circulated with the title The Welfare Effects of Non-Linear Health Dynamics
We study how nonlinear, state-dependent health dynamics shape economic behavior, inequality, and the evaluation of disability insurance at older ages. Using English panel data, we construct a continuous health index and estimate its dynamics with a flexible quantile-based method that allows persistence to vary across health states. We find that adverse health realizations are both larger and more persistent among individuals in poor health. Embedding the estimated process into a life-cycle model, we show that these state-dependent nonlinearities generate substantial losses in assets and welfare for economically vulnerable individuals--those with poor health and low wealth. Misspecifying health dynamics as state-independent attenuates these losses and leads to distorted savings behavior, with effects concentrated among vulnerable individuals. Finally, we find that the welfare losses of removing disability insurance are highly heterogeneous across health types, and are overstated by a state-independent health process.
Prenatal Sex Detection Technology and Mothers’ Labour Supply in India (with Marco Bertoni, Isha Gupta and Guglielmo Weber)
The advent of prenatal sex diagnostic technology (PSDT) in India in the mid-eighties has made it easier for women to identify the sex of children before their birth, giving them an option to attain their desired sex composition of children without having to undergo repeated pregnancies. In this paper, we investigate the impact of this technology on mothers’ labour supply using a triple-differences estimator. Our strategy combines supply-driven changes in ultrasound availability over time with plausibly exogenous family-level variation in the incentive to sex-select and son preference at the local level. We find that PSDT had a significant negative impact on mothers’ labour supply with the effect driven by wealthy and educated mothers. We further investigate the underlying channel linking prenatal sex selection and mothers’ labour supply and identify that post the increased availability of ultrasound scanners there was a substitution of girls with boys. Further investigation shows no changes in mortality and health outcomes of firstborn girls relative to boys post-PSDT. We propose a model to rationalize our reduced form resutls.
Child-Related Transfers, Fertility, and Maternal Labor Supply: Evidence from Reform-Induced Income Shocks (with Francesca Parodi and Maria De Paola)
This paper studies how increases in child-related cash transfers affect fertility and maternal labor supply. Using population-wide administrative data and exploiting heterogeneous reform-induced changes in benefit generosity, we estimate the causal effects of discrete increases in non-labor income on fertility and maternal labor supply at the extensive and intensive margins. Our design compares outcomes across adjacent treatment-intensity groups defined using predetermined household economic conditions, allowing identification in the absence of untreated units. We find that higher transfers increase the probability of having an additional child only over a limited range of benefit increases, with effects concentrated in the middle of the income distribution. At the same time, increased benefit generosity reduces maternal labor supply in the medium run, even net of fertility responses, through both employment exits and reductions in working hours. We translate these effects into local elasticities and document substantial heterogeneity across income groups.
Survival and Financial Literacy in Investment Decisions Later in Life (with Francesco Maura, Francesca Parodi and Guglielmo Weber)
We study how subjective survival beliefs and financial literacy shape financial decisions later in life. Using data from the English Longitudinal Study of Ageing, we show that individuals who underestimate their longevity are less likely to participate in financial markets. We develop and calibrate a life-cycle model with subjective survival beliefs and heterogeneous participation costs. Counterfactual exercises show that improving survival literacy increases wealth accumulation through longer planning horizons, whereas financial literacy mainly affects risky asset participation by lowering financial frictions. A randomized survey experiment provides supporting evidence for these mechanisms.
Disability Insurance and the Effects of Return-to-work Policies. Review of Economic Dynamics, 49, 351-373 (2023).
Does retirement reduce familiarity with Information and Comunication Technology? Joint with Danilo Cavapozzi. Review of Economics of the Household, 20, 553-577 (2022).
The effect of work disability on the job involvement of older workers. Joint with Danilo Cavapozzi. Journal of Economic Behavior & Organization, 192, 724-739 (2021).
How did European retirees respond to the Covid-19 pandemic? Joint with Marco Bertoni, Martina Celidoni and Guglielmo Weber. Economics Letters, 203 (2021).
Education and Persistence of Earnings Shocks. Joint with Francesco Maura. Economics Letters, 196 (2020).
Retirement and Healthy Eating. Joint with Martina Celidoni, Vincenzo Rebba and Guglielmo Weber. Fiscal Studies, 41(1), 199-219 (2020).
Labour supply and Welfare Effects of Disability Insurance: A Survey. Italian Economic Journal, 5(1), 161-189 (2019)
The contribution of paradata and features of respondents, interviewers, and survey agencies to panel co-operation in the Survey of Health Ageing and Retirement in Europe. Joint with Johanna Bristle, Martina Celidoni and Guglielmo Weber. Journal of the Royal Statistical Society, series A, 182:3-35 (2019) doi:10.1111/rssa.12391
Retirement and cognitive decline. A longitudinal analysis using SHARE data. Joint with Martina Celidoni and Guglielmo Weber. Journal of Health Economics, vol. 56, pp. 113-125 (2017).
How do early-life conditions shape health age profiles late in life? Joint with Michele Belloni, Danilo Cavapozzi, Yao Pan and Serena Trucchi. (2019) In In Axel Börsch-Supan, Johanna Bristle, Karen Andersen-Ranberg, Agar Brugiavini, Florence Jusot, Howard Litwin, Guglielmo Weber (Eds.), Health and socio-economic status over the life course: First results from SHARE Waves 6 and 7 (pp. 91–98). Berlin, Boston: De Gruyter.https://doi.org/10.1515/9783110617245-009
End-of-Working-Life Gender Wage Gap: The Role of Health Shocks, Parental Education and Personality Traits. Joint with Marco Bertoni, Andrea Bonfatti, Martina Celidoni and Angela Crema. (2019) In In Axel Börsch-Supan, Johanna Bristle, Karen Andersen-Ranberg, Agar Brugiavini, Florence Jusot, Howard Litwin, Guglielmo Weber (Eds.), Health and socio-economic status over the life course: First results from SHARE Waves 6 and 7 (pp. 141–148). Berlin, Boston: De Gruyter. https://doi.org/10.1515/9783110617245-014
Life expectancy and health investments. Joint with Marco Bertoni, Andrea Bonfatti, Martina Celidoni and Angela Crema. (2019) In In Axel Börsch-Supan, Johanna Bristle, Karen Andersen-Ranberg, Agar Brugiavini, Florence Jusot, Howard Litwin, Guglielmo Weber (Eds.), Health and socio-economic status over the life course: First results from SHARE Waves 6 and 7 (pp. 289-296). Berlin, Boston: De Gruyter.https://doi.org/10.1515/9783110617245-030
Personality traits and financial behaviour. Joint with Marco Bertoni, Andrea Bonfatti, Martina Celidoni and Angela Crema. (2019) In In Axel Börsch-Supan, Johanna Bristle, Karen Andersen-Ranberg, Agar Brugiavini, Florence Jusot, Howard Litwin, Guglielmo Weber (Eds.), Health and socio-economic status over the life course: First results from SHARE Waves 6 and 7 (pp. 49–56). Berlin, Boston: De Gruyter.https://doi.org/10.1515/9783110617245-004
A Multilevel Heckman model to investigate financial assets among older people in Europe. Joint with Omar Paccagnella. In F. Mola et al. (Eds.), Classification, (Big) Data Analysis and Statistical Learning, Studies in Classification, Data Analysis, and Knowledge Organization, Springer. (2018).
A multilevel latent class analysis of the purchasing channels among European consumers. Joint with Omar Paccagnella and Roberta Varriale. Metron, vol.74(3), pp.293-309 (2016).
I want to break free. The role of working conditions on retirement expectations and decisions. Joint with Elisabetta Trevisan and Guglielmo Weber. European Journal of Ageing, vol.12, pp.17-28 (2015).
Early-life circumstances and cognitive functioning dynamics in later life. Joint with Christelle Garrouste and Omar Paccagnella. In A. Borsch-Supan, M. Brandt, H. Litwin, Weber G. (eds), Active Ageing and Solidarity between Generations in Europe: First Results from SHARE after the Economic Crisis, De Gruyter, Berlin, pp. 209-223 (2013).
Harmonized net income measures in SHARE Wave 1. Joint with Marco Bertoni, Andrea Bonfatti, Guglielmo Weber and Francesca Zantomio. SHARE WP Series n. 25-2016