Author(s) :

Anya C. Karyekar .

Volume/Issue :

Abstract :

Serious health shocks such as cancer have the potential to significantly disrupt labor market outcomes. However, the economic consequences of a cancer diagnosis, particularly across sexes and baseline employment status, remain incompletely understood. This study utilizes a large US household survey, the Panel Study of Income Dynamics (PSID), to analyze how cancer affects labor market outcomes using a longitudinal event-study design, by examining changes in earnings before and after diagnosis. We analyze earnings trajectories before and after cancer diagnosis to identify causal effects of health shocks on economic outcomes. The results demonstrate parallel trends, indicating no change in the pre-diagnosis period across groups and a substantial and statistically significant decline in earnings following cancer diagnosis, with effects that persist and deepen over time, reaching up to 70% reductions in the postdiagnosis period. Comparative analyses by sex indicate that while women exhibit somewhat smaller declines than men, these differences are not statistically significant. Average earnings change only minimally for the subgroup of individuals who earn at least the statutory minimum wage throughout the observation period, suggesting that the primary mechanism driving overall earnings losses is labor-force exit rather than wage reductions among continuously employed workers. The identifying assumptions of the event‑study design are supported by the absence of differential earnings trends prior to diagnosis. These results underscore the importance of policies aimed at preserving labor market attachment for individuals facing serious health shocks such as cancer patients, including flexible work arrangements, comprehensive medical leave policies, or workplace accommodations designed to mitigate the economic burden of cancer.