Belloni M., Bena A., Farina E., Simonetti I., Zantomio F. (2019).

Long-Run Effects of Health Shocks in a Highly Regulated Labour Market. University Ca’ Foscari of Venice, Dept. of Economics Research Paper Series No. 32/WP/2019


Based on administrative data covering employment, social security and hospital record histories, we investigate the effect of acute cardiovascular health shocks resulting in unplanned hospitalisation, on blue collars’ long-term labour outcomes in Italy. The Italian institutional setting, characterised by a highly regulated labour market and high job protection, is different from that of countries – mainly Nordic and Anglo-Saxon – covered in previous studies. We apply matching and parametric regression techniques to remove possible bias arising from observable and time-invariant unobservable confounders. Results point at sizeable and persistent reductions in employment and labour income, while hours and wage adjustments appear limited. Whereas a relatively generous social insurance system might compensate the earnings loss, our findings question the appropriateness of existing labour inclusion policies.