More than one-third of people in the EU report having a chronic health condition (CHC), and their share in the workforce is expected to rise. Using unique linked employer-employee administrative data from Hungary—combining detailed healthcare utilization with wage records—we identify workers with CHCs and analyze their labor market outcomes with a focus on the role of firms. Men and women with CHCs are 7 and 14 percentage points less likely to be employed, respectively. Among the employed, we find wage penalties of 5.8% for men and 13.9% for women. Differences in firm-specific pay premiums account for 12% of the penalty for men and 23% for women. Event-study models with worker fixed effects show persistent wage losses following CHC onset—4% for men and 1.5% for women—of which 0.2–0.5 percentage points are due to moving to lower-paying firms, with the rest likely reflecting missed promotions and raises. We then look at the role of firm ownership, foreign ownership being a strong proxy for technology, and find that 20% of the penalty is accounted for by this firm characteristic, 60-70% of which results from worker sorting and the remaining from CHC workers benefiting less from the higher wage premium of foreign-owned firms. These numbers imply that the fall in wages between the ages 40 and 60 would be 10-20% lower had there been no CHC penalty, about 20% of which is attributable to the presence of foreign-owned firms.

This study examines the impact of ambient air pollution on birth rates in Europe. We estimate the causal effect of air pollution on fertility by utilizing variations in wind speed and the number of heating days as instrumental variables for air quality. Our analysis encompasses 657 NUTS-3 regions, with each region having 2 to 6 years of observations between 2015 and 2020. Thus, our study is the first to extend this analysis to multiple countries, pollutants, and years. Our findings indicate that a one standard deviation increase in particulate matter concentration levels leads to a 5.1% decrease in birth rates the following year and an additional 5.9% decrease two years later. Moreover, a similar increase in air pollution has a more pronounced adverse effect on fertility in countries with lower GDP. Other pollutants have little role in shaping fertility outcomes. This result is important for environmental policies with limited resources.

Disability benefits are costly and tend to reduce labor supply. While spending can be contained by careful targeting, correcting past flaws in eligibility rules or assessment procedures may entail welfare costs. We study a major reform in Hungary that reassessed the health and working capacity of a large share of beneficiaries while leaving work incentives unchanged. Leveraging birthday and health cutoffs in the reassessment, we estimate employment responses to termination or reduction of benefits driven by income effects. We find that among those who exited disability insurance due to the reform, 60% were employed in the primary labor market, 3% participated in public works and 37% were out of work without benefits in the post-reform period. The consequences of exiting disability insurance sharply differed by pre-reform employment status. 80% of beneficiaries who had some employment in the pre-reform year worked in the primary labor market, compared to only 38% of those without pre-reform employment.