The effect of a minor health shock on labor market outcomes: The case of concussions

The literature on health shocks finds that minor injuries have only short‐term labor market impacts. However, mild traumatic brain injuries (mTBIs, commonly referred to as concussions) may be different as the medical literature highlights that they can have longer‐term health and cognitive effects. Moreover, TBIs are one of the most common causes of disability globally, with the vast majority being mild. Thus, it is important to understand the impact of mTBIs on labor market outcomes. We use administrative data on all medically‐diagnosed mild traumatic brain injuries (mTBIs) in New Zealand linked to monthly tax records to examine the labor market effects of a mTBI. We use a comparison group of those who suffer a mTBI at a later date to overcome potential endogeneity issues, and employ a doubly‐robust difference‐in‐differences method. We find that suffering a mTBI has negative labor market effects. Rather than dissipating over time, these negative effects grow, representing a decrease in employment of 20 percentage points and earning losses of about a third after 48 months. Our results highlight the need for timely diagnosis and treatment to mitigate the effect of mTBIs to reduce economic and social costs.