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Measuring the Health Cost of Prolonged Unemployment: Evidence from the Great Recession

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  • Beatty, Timothy K.M.
  • Ritter, Joseph A.

Abstract

How much does a year of unemployment affect a person’s health? Previous studies estimate the health effects of job loss after a follow-up period, but the length of unemployment spells within the follow-up is an implicitly variable treatment. Thus estimates based on a fixed follow up average over unemployment spells of different lengths, which implicitly depend on macroeconomic conditions. We estimate the effects of time unemployed and find robust negative effects of duration on men’s self-assessed health. For women the estimated effects are smaller and less precise. We use an instrumental variables approach to account for dynamic selection driven by feedback from health to duration via search intensity or reservation wages. Combining these effects with prior estimates of the relationship between self-assessed health and specific-cause mortality suggests the effects correspond to large social costs.

Suggested Citation

  • Beatty, Timothy K.M. & Ritter, Joseph A., 2018. "Measuring the Health Cost of Prolonged Unemployment: Evidence from the Great Recession," Staff Papers 280435, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:280435
    DOI: 10.22004/ag.econ.280435
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    References listed on IDEAS

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    Health Economics and Policy; Labor and Human Capital;

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