Effects of ill-health and health shocks on labour market outcomes under social protection constraints

Shawa, Ken and Hollingsworth, Bruce and Zucchelli, Eugenio (2025) Effects of ill-health and health shocks on labour market outcomes under social protection constraints. PhD thesis, Lancaster University.

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Abstract

This thesis examines the effects of ill-health and health shocks on labour market outcomes. To achieve this, given the paucity of meta-analyses on the topic, a systematic review and meta-analysis was initially undertaken which is presented as chapter two of the thesis. The results from the review and meta-analysis show statistically significant pooled estimates of the effects of ill-health and health shocks on hours worked and the probability of employment. These results justified the research questions pursued in the thesis, including specific analysis of Malawi where no work of this nature has been undertaken before and where evidence could be useful in policy terms. To explore the effects of ill-health and health shocks on labour supply, in chapter three, data from Malawi were used to assess the effects of several proxies of health shocks and ill-health. This included illness/injury, hospital admission, and chronic illness, on the probabilities of wage employment, casual employment, job search and on hours of work. The chapter employed nearest neighbour propensity score matching to estimate Average Treatment Effects on the Treated (ATET). Overall, results of the analysis showed that a) individuals who reported to have suffered an illness or injury in the last fourteen days significantly reduced their probability of wage employment but increased the probability of casual employment; b) individuals who reported to have experienced a hospital admission in the last twelve months significantly reduced their probability of wage employment but increased their probability of casual employment; and c) individuals who reported that they suffered from a chronic disease significantly reduced both their probabilities of wage employment and casual employment. Furthermore, results showed that individuals who reported to have suffered an illness or injury in the last fourteen days, those who reported to have experienced a hospital admission in the last twelve months as well as those who reported that they suffered from a chronic disease, significantly reduced their weekly hours of work. Moreover, in terms of the probability of job search, the study found that individuals who reported to have suffered an illness or injury in the last fourteen days significantly reduced their probability of job search while those who reported that they suffered from a chronic disease significantly increased the probability of searching for a job. There was no statistically significant effect on the probability of job search for individuals who reported to have experienced a hospital admission in the last twelve months. In chapter four, a wide range of count data models including negative binomial, zero-inflated negative binomial, Poisson, zero-inflated Poisson, and a two-part model were used to assess the joint effects of ill-health and health shocks together with social protection on the intensive margin of labour supply using rich data from Malawi. A standard OLS model was also estimated to provide baseline estimates which were not based on a count data model. Weekly hours of work were employed in the analysis. Results showed that a) individuals who suffered an illness/injury and benefited from social protection reduced their hours of work; b) individuals who had experienced a hospital admission and benefited from social protection increased their hours of work; and c) individuals with chronic illnesses who benefited from social protection reduced their weekly hours of work. The results of the thesis have important policy implications for Malawi and other low- and middle-income countries (LMICs). More specifically, the evidence presented here can inform the development of health and labour policies, encompassing initiatives to facilitate job search through public employment services, enhance access to social protection, and strengthen primary healthcare and universal health coverage as well as the overall health infrastructure.