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Using national data from China Labour-force Dynamics Survey (CLDS), we apply Heckman two-step model and instrumental variable method to analyse the impact of long-term and short-term health shock on the labour supply and labour income of migrant workers as well as the mediating effect of medical insurance. Results indicate that both long-term and short-term health shock significantly reduce the labour supply and labour income of migrant workers. In particular, the negative effect of short-term health shock on labour supply proves greater than that of long-term health shock, and the negative effect of long-term health shock on labour income proves greater than that of short-term health shock. Medical insurance mitigates the negative effect of short-term health shock on the labour supply and labour income of migrant workers, yet produces no remarkable mediating effect on migrant workers who suffer from long-term health shock.

applied economics letters

The impact of long-term and short-term health shock on the labour supply and labour income of migrant workers in China: the mediating role of medical insurance