This paper investigates whether health shocks in terms of road injuries 'cause' a permanent reduction in disposable income, earnings, employment, and public transfer income. Our data are a random sample of the adult population of Denmark for the years 1981-2000. For this large representative panel we have very full records on demographics, work status, income, and detailed information on road injuries. We use ‘propensity score matching' to estimate the counter-factual of what the disposable income, earnings, the number of working hours, and the amount of public transfer income would have been of a particular group of persons injured by road accidents if they had not in fact been injured. We find that road injuries have large financial consequences. Older injured persons have significantly lower disposable incomes than older non-injured persons. In the long run (after 6 years) the employment rates for the injured are 10 and 8 per cent lower for men and women, respectively, than for non-injured persons. Besides, earnings are reduced in the long run for men where significant effects are only found for older women. The analysis shows that both injured men and women are compensated in terms of a significant increase in public transfer incomes in both the short and the long run. (Author/publisher)
Abstract