Impacts of adult illness on employment outcomes of rural households in India.

Background: Existing literature on the impacts of adult illness on household labour supply and income in low- and middle-income countries shows that adverse health conditions significantly affect household labour supply, work participation and earnings. Most of the studies, however, are not equipped to distinguish between short- and long-term consequences of adult illness. We measured the impact of adult illness on household employment outcomes both in the short- and the long-run, using a unique longitudinal data set from rural India.

Methods: We used two waves of India Human Development Survey (1993-94 and 2004-05) with a balanced panel of 10 726 households to assess short-run (in the year of the occurrence of adult illness) and long-run (after 11 years of the occurrence of adult illness) effects of major illness of adult household members aged 15-64 years on household employment outcomes, using multiple matching methods: nearest-neighbor matching and inverse probability weighting following propensity score matching, and coarsened exact matching to compare employment outcomes to a set of matched control households.

Results: Rural households affected by adult illness experienced declines in workforce participation rate by 1-3%, wage employment by 4-15 days, and wage-earnings by Indian Rupee (INR) 374 to INR 837 compared to the matched control households in the short-run. In response, adult non-sick members of the affected households increased their workforce participation sharply by 14-16% to compensate for shortfalls in the short-run. In the long-run, workforce participation rate of the affected households also declined by nearly 1-3%. The long-run declines in wage-days and wage-earnings were small and not always statistically significant across the methods. However, long-run workforce participation rate of non-sick adults were smaller (4-6%) compared to short-run, but still statistically significant.

Conclusions: The long-term effects were smaller in absolute magnitude than those of the short-run. This suggests coping and adjustments by the affected households using this 11-year longer time-span in a manner that helps to ameliorate the immediate impacts of adult illness. Our study also reiterates the importance of improving financial access to health services as well as access to social security benefits for the illness-affected households in rural India both in the short- and long-run.