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The health externalities of downsizing

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  • Winter-Ebmer, Rudolf
  • Ahammer, Alexander
  • Grübl, Dominik

Abstract

We show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.

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  • Winter-Ebmer, Rudolf & Ahammer, Alexander & Grübl, Dominik, 2020. "The health externalities of downsizing," CEPR Discussion Papers 15588, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15588
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    5. Heather Kolakowski & Mardelle McCuskey Shepley & Ellie Valenzuela-Mendoza & Nicolas R. Ziebarth, 2021. "How the COVID-19 Pandemic Will Change Workplaces, Healthcare Markets and Healthy Living: An Overview and Assessment," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
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    More about this item

    Keywords

    Downsizing; Mass layoffs; Health; Job insecurity;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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