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The Public Health Costs of Unemployment

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Author Info
Andreas KUHN
Rafael LALIVE
Josef ZWEIMÜLLER

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Abstract

This paper studies how unemployment affects public health costs. We use plant closure as an instrument for unemployment because bankruptcy is unlikely to be caused by deteriorating health but has a strong impact on workers' subsequent employment. The empirical analysis is based on an extremely rich data set with comprehensive information on various types of health care costs and day-by-day work history of individual workers. Our central findings are (i) expenditures on medical treatments are not strongly affected by joblessness, (ii) lack of employment reduces mental health for men but not for women, and (iii) sickness benefit payments strongly increase due to job loss. Our results also show that OLS estimates strongly overestimate the causal effect of unemployment on public health costs.

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Publisher Info
Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 07.08.

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Length: 51 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:lau:crdeep:07.08

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Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.65
Web page: http://www.hec.unil.ch/deep/publications-english/e-cahiers.htm

For technical questions regarding this item, or to correct its listing, contact: (Claudine Delapierre Saudan).

Related research
Keywords: social cost of unemployment; health; non-employment; plant closure;

Find related papers by JEL classification:
I12 - Health, Education, and Welfare - - Health - - - Health Production
I19 - Health, Education, and Welfare - - Health - - - Other
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

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References listed on IDEAS
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  1. Gerdtham, Ulf-G. & Ruhm, Christopher J., 2006. "Deaths rise in good economic times: Evidence from the OECD," Economics and Human Biology, Elsevier, vol. 4(3), pages 298-316, December. [Downloadable!] (restricted)
    Other versions:
  2. Gerdtham, Ulf-G. & Johannesson, Magnus, 2003. "A note on the effect of unemployment on mortality," Journal of Health Economics, Elsevier, vol. 22(3), pages 505-518, May. [Downloadable!] (restricted)
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    Other versions:
  5. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October. [Downloadable!]
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  11. Arnaud Chevalier & L Feinstein, 2006. "Sheepskin or Prozac: The Causal Effect of Education on Mental Health," CEE Discussion Papers 0071, Centre for the Economics of Education, LSE. [Downloadable!]
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  12. Martin Browning & Anne Moller Dano & Eskil Heinesen, 2006. "Job displacement and stress-related health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1061-1075. [Downloadable!]
  13. Stewart, Jennifer M., 2001. "The impact of health status on the duration of unemployment spells and the implications for studies of the impact of unemployment on health status," Journal of Health Economics, Elsevier, vol. 20(5), pages 781-796, September. [Downloadable!] (restricted)
    Other versions:
  14. Magnus Henrekson & Mats Persson, 2004. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 87-114, January. [Downloadable!]
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  15. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September. [Downloadable!] (restricted)
  16. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
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