IDEAS home Printed from https://ideas.repec.org/p/bge/wpaper/838.html
   My bibliography  Save this paper

Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession

Author

Listed:
  • Lídia Farré
  • Francesco Fasani
  • Hannes Mueller

Abstract

This article documents a strong connection between unemployment and mental disorders using data from the Spanish Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job loss. Our results suggest that an increase of the unemployment rate by 10 percent due to collapse of the sector raised mental disorders in the affected population by 3 percent. We argue that the large size of this effect responds to the fact that the construction sector was at the center of the macroeconomic shock. As a result, workers exposed to the negative employment shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, hopelessness and feelings of uselessness.

Suggested Citation

  • Lídia Farré & Francesco Fasani & Hannes Mueller, 2015. "Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession," Working Papers 838, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:838
    as

    Download full text from publisher

    File URL: https://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/838_0.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Eliason, Marcus & Storrie, Donald, 2009. "Job loss is bad for your health - Swedish evidence on cause-specific hospitalization following involuntary job loss," Social Science & Medicine, Elsevier, vol. 68(8), pages 1396-1406, April.
    2. Lant Pritchett & Lawrence H. Summers, 1996. "Wealthier is Healthier," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 841-868.
    3. Olivier Blanchard, 2018. "Should We Reject the Natural Rate Hypothesis?," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 97-120, Winter.
    4. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-324, March.
    5. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
    6. Christian Dustmann & Francesco Fasani, 2016. "The Effect of Local Area Crime on Mental Health," Economic Journal, Royal Economic Society, vol. 126(593), pages 978-1017, June.
    7. 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.
    8. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
    9. Ann H. Stevens & Douglas L. Miller & Marianne E. Page & Mateusz Filipski, 2015. "The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 279-311, November.
    10. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    11. Katharine G. Abraham & John Haltiwanger & Kristin Sandusky & James R. Spletzer, 2019. "The Consequences of Long-Term Unemployment: Evidence from Linked Survey and Administrative Data," ILR Review, Cornell University, ILR School, vol. 72(2), pages 266-299, March.
    12. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
    13. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    14. Douglas L. Miller & Marianne E. Page & Ann Huff Stevens & Mateusz Filipski, 2009. "Why Are Recessions Good for Your Health?," American Economic Review, American Economic Association, vol. 99(2), pages 122-127, May.
    15. Alois Stutzer & Rafael Lalive, 2004. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 696-719, June.
    16. 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.
    17. Clark, Andrew & Knabe, Andreas & Rätzel, Steffen, 2010. "Boon or bane? Others' unemployment, well-being and job insecurity," Labour Economics, Elsevier, vol. 17(1), pages 52-61, January.
    18. N/A, 2009. "On the Recession," Local Economy, London South Bank University, vol. 24(3), pages 253-253, May.
    19. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2015. "Losing Heart? The Effect of Job Displacement on Health," ILR Review, Cornell University, ILR School, vol. 68(4), pages 833-861, August.
    20. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    21. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    22. Martin Salm, 2009. "Does job loss cause ill health?," Health Economics, John Wiley & Sons, Ltd., vol. 18(9), pages 1075-1089, September.
    23. Mari Rege & Kjetil Telle & Mark Votruba, 2009. "The Effect of Plant Downsizing on Disability Pension Utilization," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 754-785, June.
    24. Anne C. Gielen & Jan C. Ours, 2014. "Unhappiness and Job Finding," Economica, London School of Economics and Political Science, vol. 81(323), pages 544-565, July.
    25. Alan B. Krueger & Judd Cramer & David Cho, 2014. "Are the Long-Term Unemployed on the Margins of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 229-299.
    26. Katharine G. Abraham & Kristin Sandusky & John Haltiwanger & James R. Spletzer, 2016. "The Consequences of Long Term Unemployment: Evidence from Matched Employer-Employee Data," Working Papers 16-40, Center for Economic Studies, U.S. Census Bureau.
    27. Schaller, Jessamyn & Stevens, Ann Huff, 2015. "Short-run effects of job loss on health conditions, health insurance, and health care utilization," Journal of Health Economics, Elsevier, vol. 43(C), pages 190-203.
    28. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    29. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    30. 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, October.
    31. repec:iza:izawol:journl:y:2014:p:94 is not listed on IDEAS
    32. Danny Yagan, 2017. "Employment Hysteresis from the Great Recession," NBER Working Papers 23844, National Bureau of Economic Research, Inc.
    33. Daniel G. Sullivan & Till von Wachter, 2006. "Mortality, mass-layoffs, and career outcomes: an analysis using administrative data," Working Paper Series WP-06-21, Federal Reserve Bank of Chicago.
    34. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 617-650.
    35. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, January.
    36. 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.
    37. Nathaniel G. Hilger, 2016. "Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 247-283, July.
    38. Rainer Winkelmann, 2014. "Unemployment and happiness," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-94, October.
    39. Petri Böckerman & Pekka Ilmakunnas, 2009. "Unemployment and self‐assessed health: evidence from panel data," Health Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 161-179, February.
    40. Kuhn, Andreas & Lalive, Rafael & Zweimüller, Josef, 2009. "The public health costs of job loss," Journal of Health Economics, Elsevier, vol. 28(6), pages 1099-1115, December.
    41. Salm, M., 2009. "Does job loss cause ill health?," Other publications TiSEM 314436db-9957-4912-ba47-9, Tilburg University, School of Economics and Management.
    42. Clark, Andrew & Knabe, Andreas & Rätzel, Steffen, 2010. "Boon or bane? Others' unemployment, well-being and job insecurity," Labour Economics, Elsevier, vol. 17(1), pages 52-61, January.
    43. Marcus Eliason & Donald Storrie, 2009. "Does Job Loss Shorten Life?," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    44. Rosa Urbanos-Garrido & Beatriz Lopez-Valcarcel, 2015. "The influence of the economic crisis on the association between unemployment and health: an empirical analysis for Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(2), pages 175-184, March.
    45. 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.
    46. Ruhm, Christopher J., 2003. "Good times make you sick," Journal of Health Economics, Elsevier, vol. 22(4), pages 637-658, July.
    47. Goldsmith, Arthur H. & Veum, Jonathan R. & William Darity, Jr., 1996. "The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression," Journal of Economic Psychology, Elsevier, vol. 17(2), pages 183-220, April.
    48. Jahoda,Marie, 1982. "Employment and Unemployment," Cambridge Books, Cambridge University Press, number 9780521285865, January.
    49. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Italo Colantone & Rosario Crinò & Laura Ogliari, 2015. "The Hidden Cost of Globalization: Import Competition and Mental Distress," BAFFI CAREFIN Working Papers 1511, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    2. Samuel Bentolila & J. Ignacio García-Pérez & Marcel Jansen, 2017. "Are the Spanish long-term unemployed unemployable?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(1), pages 1-41, March.
    3. Devillanova, Carlo & Raitano, Michele & Struffolino, Emanuela, 2019. "Longitudinal employment trajectories and health in middle life: Insights from linked administrative and survey data," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 1375-1412.
    4. Precious Mncayi & Phindile Mdluli, 2019. "Why are they not looking for employment? A South African Youth Perspective," Proceedings of International Academic Conferences 9912247, International Institute of Social and Economic Sciences.
    5. José Ignacio Garcia-Pérez & Manuel Serrano-Alarcón & Judit Vall Castelló, 2020. "Long-term unemployment subsidies and middle-age disadvantaged workers’ health," Studies on the Spanish Economy eee2020-46, FEDEA.
    6. Colantone, Italo & Crinò, Rosario & Ogliari, Laura, 2019. "Globalization and mental distress," Journal of International Economics, Elsevier, vol. 119(C), pages 181-207.
    7. Fasani, Francesco & Frattini, Tommaso & Minale, Luigi, 2020. "Lift the Ban? Initial Employment Restrictions and Refugee Labour Market Outcomes," CEPR Discussion Papers 14765, C.E.P.R. Discussion Papers.
    8. Antonia Lopez Villavicencio & Maria Cervini, 2019. "The mental health consequences of globalisation," EconomiX Working Papers 2019-26, University of Paris Nanterre, EconomiX.
    9. Jonathan de Quidt & Johannes Haushofer, 2017. "Depression through the Lens of Economics: A Research Agenda," NBER Chapters, in: The Economics of Poverty Traps, pages 127-152, National Bureau of Economic Research, Inc.
    10. Di Maio, Michele & Nisticò, Roberto, 2019. "The effect of parental job loss on child school dropout: Evidence from the Occupied Palestinian Territories," Journal of Development Economics, Elsevier, vol. 141(C).
    11. Olivier Bargain & Laurine Martinoty, 2019. "Crisis at home: mancession-induced change in intrahousehold distribution," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 277-308, January.
    12. Daniel Albalate & Germà Bel & Lídia Farré, 2020. "An analysis on the success of privately-led job search assistance programs against social exclusion," IREA Working Papers 202002, University of Barcelona, Research Institute of Applied Economics, revised Feb 2020.
    13. Barone, Adriana & Barra, Cristian, 2019. "Weight status and mental health in Italy: Evidence from EHIS2 microdata," MPRA Paper 96703, University Library of Munich, Germany.
    14. Alloush, M., 2018. "Income, Psychological Well-being, and the Dynamics of Poverty: Evidence from South Africa," 2018 Annual Meeting, August 5-7, Washington, D.C. 274223, Agricultural and Applied Economics Association.
    15. Jonathan de Quidt & Johannes Haushofer, 2016. "Depression for Economists," NBER Working Papers 22973, National Bureau of Economic Research, Inc.
    16. Victoria Baranov & Sonia Bhalotra & Pietro Biroli & Joanna Maselko, 2017. "Maternal Depression, Women’s Empowerment, and Parental Investment: Evidence from a Large Randomized Control Trial," CHILD Working Papers Series 60 JEL Classification: I1, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    17. Lee, Y-W.;, 2019. "Effects of Parental Job Loss and Insecurity on Children’s Health: Evidence from Korea," Health, Econometrics and Data Group (HEDG) Working Papers 19/09, HEDG, c/o Department of Economics, University of York.
    18. O’Leary, Nigel & Li, Ian W. & Gupta, Prashant & Blackaby, David, 2020. "Wellbeing trajectories around life events in Australia," Economic Modelling, Elsevier, vol. 93(C), pages 499-509.
    19. Adriana Barone & Cristian Barra, 2020. "The Relationship between Employment and Mental Health Problems in Italy: Evidence from EHIS2 Microdata," Working Papers 3_240, Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno, revised Jul 2020.
    20. Victoria Baranov & Sonia Bhalotra & Pietro Biroli & Joanna Maselko, 2018. "Maternal Depression, Women’s Empowerment, and Parental Investment: Evidence from a Randomized Control Trial," Working Papers 2018-021, Human Capital and Economic Opportunity Working Group.
    21. Baranov, Victoria & Bhalotra, Sonia R. & Biroli, Pietro & Maselko, Joanna, 2017. "Maternal Depression, Women's Empowerment, and Parental Investment: Evidence from a Large Randomized Control Trial," IZA Discussion Papers 11187, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Everding, Jakob & Marcus, Jan, 2020. "The effect of unemployment on the smoking behavior of couples," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 154-170.
    2. Bassanini, Andrea & Caroli, Eve, 2014. "Is work bad for health? The role of constraint vs choice," CEPREMAP Working Papers (Docweb) 1402, CEPREMAP.
    3. Mariya Melnychuk, 2012. "Mental health and economic conditions: how do economic fluctuations influence mental problems?," Working Papers. Serie AD 2012-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    4. repec:dau:papers:123456789/12483 is not listed on IDEAS
    5. Bloemen, Hans & Hochguertel, Stefan & Zweerink, Jochem, 2018. "Job loss, firm-level heterogeneity and mortality: Evidence from administrative data," Journal of Health Economics, Elsevier, vol. 59(C), pages 78-90.
    6. Maclean, Johanna Catherine, 2013. "The health effects of leaving school in a bad economy," Journal of Health Economics, Elsevier, vol. 32(5), pages 951-964.
    7. Kunze, Lars & Suppa, Nicolai, 2017. "Bowling alone or bowling at all? The effect of unemployment on social participation," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 213-235.
    8. Kamila Cygan‐Rehm & Daniel Kuehnle & Michael Oberfichtner, 2017. "Bounding the causal effect of unemployment on mental health: Nonparametric evidence from four countries," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 1844-1861, December.
    9. 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.
    10. Bíró, Anikó & Elek, Péter, 2020. "Job loss, disability insurance and health expenditure," Labour Economics, Elsevier, vol. 65(C).
    11. Milena Nikolova & Sinem H. Ayhan, 2019. "Your spouse is fired! How much do you care?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 799-844, July.
    12. Schaller, Jessamyn & Stevens, Ann Huff, 2015. "Short-run effects of job loss on health conditions, health insurance, and health care utilization," Journal of Health Economics, Elsevier, vol. 43(C), pages 190-203.
    13. Jan Marcus, 2014. "Does Job Loss Make You Smoke and Gain Weight?," Economica, London School of Economics and Political Science, vol. 81(324), pages 626-648, October.
    14. Cygan-Rehm, Kamila & Kühnle, Daniel & Oberfichtner, Michael, 2017. "Bounding the Causal Effect of Unemployment on Mental Health: Nonparametric Evidence from Four Countries," IZA Discussion Papers 10652, Institute of Labor Economics (IZA).
    15. Hummels, David & Munch, Jakob & Xiang, Chong, 2015. "No Pain, No Gain: The Effects of Exports on Job Injury and Sickness," 2015: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229253, International Agricultural Trade Research Consortium.
    16. Eva Maria Mörk & Anna Sjögren & Helena Svaleryd, 2019. "Consequences of Parental Job Loss on the Family Environment and on Human Capital Formation - Evidence from Plant Closures," CESifo Working Paper Series 7811, CESifo.
    17. Gathmann, Christina & Huttunen, Kristiina & Jernström, Laura & Sääksvuori, Lauri & Stitzing, Robin, 2020. "In Sickness and in Health: Job Displacement and Health. Spillovers in Couples," Working Papers 133, VATT Institute for Economic Research.
    18. Marcus, Jan, 2013. "The Effect of Unemployment on the Mental Health of Spouses – Evidence from plant closures in Germany," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 546-558.
    19. Schmitz, Hendrik, 2011. "Why are the unemployed in worse health? The causal effect of unemployment on health," Labour Economics, Elsevier, vol. 18(1), pages 71-78, January.
    20. Johannes Stauder, 2019. "Unemployment, unemployment duration, and health: selection or causation?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(1), pages 59-73, February.
    21. Mörk, Eva & Sjögren, Anna & Svaleryd, Helena, 2020. "Consequences of parental job loss on the family environment and on human capital formation-Evidence from workplace closures," Labour Economics, Elsevier, vol. 67(C).

    More about this item

    Keywords

    unemployment; mental health; great recession; Spain; construction; suicide;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:838. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar). General contact details of provider: http://edirc.repec.org/data/bargses.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.