Saturday, September 18, 2010

Unemployment and Mortality

Christopher Ruhm of the University of North Carolina has a series of papers that examine negative health effects of booms and therefore potentially positive health effects of downturns. One basic idea is that during booming economic conditions, people devote less time to exercise and self-care, and incur greater stress weakening autoimmune functions and placing greater pressure on a number of body systems. His IDEAS page has links to several papers on this theme. There is some consistency with the Irish experience, which saw a huge rise in suicides over the economic boom period albeit a rapidly increasing life expectancy. Ruhm's findings are for the general population however and the effects of unemployment on health and mortality look, from my reading, to be universally negative. A substantial number of recent credible studies attest to this.  A recent BMJ paper based on large scale Swedish data cast some doubt about this relationship, arguing that unobserved heterogeneity explains much of the correlation. However, there is a bulk of literature showing that Sweden has unusually good social and financial safety nets for unemployment and this should be kept in context. The QJE paper from last year below is a particularly striking example of the negative effects of job displacement on health.

Job Displacement and Mortality: An Analysis Using Administrative Data

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Author Info
Daniel Sullivan (Research Department, Federal Reserve Bank of Chicago.)
Till von Wachter (Department of Economics, Columbia University, NBER, CEPR, and IZA.)
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We use administrative data on the quarterly employment and earnings of Pennsylvanian workers in the 1970s and 1980s matched to Social Security Administration death records covering 1980-2006 to estimate the effects of job displacement on mortality. We find that for high-seniority male workers, mortality rates in the year after displacement are 50%-100% higher than would otherwise have been expected. The effect on mortality hazards declines sharply over time, but even twenty years after displacement, we estimate a 10%-15% increase in annual death hazards. If such increases were sustained indefinitely, they would imply a loss in life expectancy of 1.0-1.5 years for a worker displaced at age forty. We show that these results are not due to selective displacement of less healthy workers or to unstable industries or firms offering less healthy work environments. We also show that workers with larger losses in earnings tend to suffer greater increases in mortality. This correlation remains when we examine predicted earnings declines based on losses in industry, firm, or firm-size wage premiums.

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