Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313105 
Year of Publication: 
2024
Series/Report no.: 
CINCH series No. 2024/02
Publisher: 
University of Duisburg-Essen, CINCH - Health Economics Research Center, Essen
Abstract: 
We examine the effect of fatal and nonfatal health shocks on household debt defaults. Fatal shocks significantly cause defaults, especially among surviving spouses lacking sufficient resources, namely housing wealth. Our findings suggest that this behavior is not due to inattention. These shocks also have intergenerational consequences, as children of resource-poor surviving spouses become more likely to face debt collection. These findings in a country with a relatively generous welfare system manifest the graveness of background risks among poorer households and suggest the potential for improving social insurance programs. Nonfatal health shocks lead to an immediate but temporary increase in default likelihood.
Subjects: 
Financial Distress
Health Shocks
Household Debt
Household Saving
JEL: 
I12
G51
G22
Document Type: 
Working Paper

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