Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215219 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12823
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
income volatility
health
well-being
Canada
JEL: 
C22
D31
I10
I14
I31
Document Type: 
Working Paper

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