Essays in Health and Income Dynamics

Title: Essays in Health and Income Dynamics
Authors: Sopchokchai, Duangsuda
Date: 2016
Abstract: This thesis consists of two related chapters and one unrelated chapter. The first focuses on the health of immigrants in Canada, using the most up-to-date Canadian Community Health Surveys (CCHS). I re-investigate the previously well-established Healthy Immigrant Effect (HIE)--the finding that upon arrival, immigrants are relatively healthier than the native-born population; but that this health advantage declines over the years after migration. Measures of health used in this study include self-assessed health status, the likelihood of being overweight or obese, and the incidence of various chronic conditions. The first part of this chapter replicates the heavily cited work of McDonald and Kennedy (2004) by pooling multiple years of CCHS, and estimating a model controlling for immigrants' cohorts of arrival to disentangle the true effect of years-since-migration (YSM) from the cohort effects. The second part of this chapter takes a closer look at the more recent cohorts of arrival of immigrants. Here I use a matching method to compare various measures of health between immigrants who arrived before and after the implementation of the Immigration and Refugee Protection Act (IRPA). It is important to note that this study does not make any direct link between the implementation of IRPA and the health outcomes of immigrants. It merely observes and compares the health of two different cohorts of immigrants, making no assumptions as to whether these changes are a result of IRPA. My main finding is that the initial health advantage is no longer present for more recent cohorts of immigrants to Canada, and that these recent cohorts of immigrants face higher health risks associated with being overweight or obese. The other two chapter--Chapter 2, Income Processes and Intra-household Risk Sharing, and Chapter 3, Health Shocks and Income Dynamics--deal with different aspects of modelling of labour income risk over the life cycle using the US Medical Expenditure Panel Survey (MEPS). In Chapter 2, I take advantage of MEPS's large sample size (some 40,000 households) to concentrate on estimating income risk-sharing among couples. This refers to an intra-household insurance mechanism that allows couples to diversify labour income risks; for instance, they can and dynamically coordinate labour-supply decisions in response to income shocks. Specifically, this study decomposes income volatility, distinguishing between single and couple household types, and models couples' income risk-sharing as the covariance of the husband and wife's income variance for both transitory and permanent components. I use an innovative identification strategy, assuming the invariability of market price for labour to marital status, to uncover couple-specific risk-sharing parameters by allowing the income profile of singles and non-singles to have partial common structure. I find evidence of risk-sharing between spouses in response to both transitory and permanent income shocks, suggesting that couples' earning capability might be partially insulated from the impact of transitory and permanent income risk. Chapter 3 is co-authored with two of my supervisors, C. Deri Armstrong and G. Dunbar. The work is done primarily by myself, except for the Introduction, where both co-authors contribute to the writing. G. Dunbar also contributes to parts of the sections on Heterogeneous Health Impacts and Endogeneity, and to the Conclusion. This chapter also uses MEPS data, but focuses on understanding the significance of the negative health shocks in decomposing labour income risk. As in Chapter 2, we break down the cross-sectional variance of residual earnings into transitory and permanent components. We then propose a method to decompose the heterogeneity of health shocks impacts by partitioning the cross-sectional variance of residual earnings into a health and non-health component. We use emergency room (ER) visits as a proxy for negative health shocks, and we separately consider the impact of these negative health shocks for several groups, such as single men and single women with no child, single mothers, and couples. We also probe the role of health insurance in attenuating the income effects of health shocks, and put forward a creative method to control for misspecification biases in the income regressions--the usual ability bias. Our results suggest that heterogeneity in health shocks is gender-differentiated. We find that health shocks have heterogeneous impacts for single women with no child, as well as single mothers; but no such evidence is found for single men. For couples, we find that having health insurance coverage reduces the impact of negative health shocks on income volatility by roughly 10 percentage points.
CollectionThèses, 2011 - // Theses, 2011 -