Hybrid seminar: The Inequality of Labor and Health Risks: A Probability-Impact Perspective

We decompose the risk of labor and health shocks along an extensive margin (probability of incidence) and intensive margin (impact given incidence, measured as shock persistence). The two margins turn out to be positively correlated, revealing a group of individuals that is particularly vulnerable and poorly resilient to adverse events. Leveraging machine learning techniques and Dutch administrative data, we show that shock persistence is predictable at the individual level and that it is unevenly distributed. By integrating our analysis with individual-level shock probability estimates from Cammeraat et al. (2023), we reveal a triple-layered accumulation of risk: (1) ex-ante probabilities of shock incidence are correlated across the domains of labor and health; (2) higher ex-ante shock exposure is associated with greater shock persistence; and (3) experiencing multiple shocks amplifies the likelihood of persistent impacts. These insights can help inform the design of pro-active and unified policies that support vulnerable groups.