Spousal Health Shocks and the Labor Supply of the Healthy Spouse: Caregiving Constraints and the Limits of Intergenerational Substitution

Abstract: We study how the healthy spouse adjusts labor supply after the other spouse suffers an acute health shock, using doctor-diagnosed stroke in the China Health and Retirement Longitudinal Study (CHARLS) and chronic disease in the China Family Panel Studies (CFPS). A spouse’s health shock imposes an income loss, which pushes the healthy spouse into paid work, and a caregiving burden, which pulls the healthy spouse out. We identify the net effect from the timing of the shock using an event-study design with individual and wave fixed effects and corroborate it with Callaway–Sant’Anna and Sun–Abraham estimators. In CFPS, a spousal health shock raises the probability that the healthy spouse exits paid work by 4.5 percentage points two periods after onset (p<0.01), with effects building over time; the CHARLS stroke estimates are imprecise but point in the same direction. The effect is not attenuated by child co-residence, implying that spousal caregiving obligations are rigid and intergenerational substitution is weaker than commonly assumed.