Connections between Labor Supply and Health

The dissertation consists of two papers exploring connections between labor supply and health. In the first chapter, I focus on disability insurance in the U.S. The U.S. Social Security Disability Insurance currently classifies applicants as either fully disabled or not, incentivizing partially disabled applicants to exaggerate health problems and retire early. The literature shows that early retirement can increase mortality. I use Health and Retirement Study data to estimate a life-cycle model that allows the evaluation of the labor and health effects of changes in the SSDI design. Specifically, I focus on a modification that allows disability benefits for partially disabled Americans aged between 51 and Social Security’s full retirement age. Simulations show this reform raises labor supply by up to ∼6 p.p., cuts the annual mortality rate by 0.1 p.p. and disability prevalence by 1% for this age group, extending ∼40,000 lives. The net cost of prolonging one person’s life by one year by this reform is ∼$17,000. The second chapter explores the interrelation between labor supply and health in the context of the COVID-19 pandemic in Russia. This chapter analyzes the tradeoff of the consequences of school closure during the COVID-19 pandemic. The effect of school closure on children’s health, parents’ health, and parental labor supply are analyzed. The study uses the Russian household survey linked with the grade-specific daily dataset on regional school closures. The published dates of survey interviews are leveraged to exploit within-round variation in schooling disruptions. Specifically, daily data on schooling policies are aggregated to match the timeframe of survey questions. Estimates based on the fixed effects model across a 5-year (2017-2021) panel show that school closures significantly decrease the probability of children experiencing flu-like symptoms and having other health issues. Parents indirectly benefit from school closure via reduced contagion. On the other hand, school closures significantly disrupted parental labor supply.