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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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    File URL: http://ageconsearch.umn.edu/record/280435/files/SP18-4Full.pdf
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    References listed on IDEAS

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    1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    2. Browning, Martin & Heinesen, Eskil, 2012. "Effect of job loss due to plant closure on mortality and hospitalization," Journal of Health Economics, Elsevier, vol. 31(4), pages 599-616.
    3. Andrew Halpern-Manners & John Warren, 2012. "Panel Conditioning in Longitudinal Studies: Evidence From Labor Force Items in the Current Population Survey," Demography, Springer;Population Association of America (PAA), vol. 49(4), pages 1499-1519, November.
    4. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 617-650.
    5. Denise Doiron & Denzil G. Fiebig & Meliyanni Johar & Agne Suziedelyte, 2015. "Does self-assessed health measure health?," Applied Economics, Taylor & Francis Journals, vol. 47(2), pages 180-194, January.
    6. Linn, M.W. & Sandifer, R. & Stein, S., 1985. "Effects of unemployment on mental and physical health," American Journal of Public Health, American Public Health Association, vol. 75(5), pages 502-506.
    7. Daniel Sullivan & Till von Wachter, 2009. "Job Displacement and Mortality: An Analysis Using Administrative Data," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1265-1306.
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    Keywords

    Health Economics and Policy; Labor and Human Capital;

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