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Long-term unemployment subsidies and middle-age disadvantaged workers’ health

Author

Listed:
  • José Ignacio Garcia-Pérez

    (Universidad Pablo Olavide & FEDEA)

  • Manuel Serrano-Alarcón

    (NOVA University of Lisbon & CRES-UPF)

  • Judit Vall Castelló

    (Universitat de Barcelona & IEB & CRES-UPF)

Abstract

We estimate the labour market and health effects of a long-term unemployment (LTU) subsidy targeted to middle aged disadvantaged workers. In order to do so, we exploit a Spanish reform introduced in July 2012 that increased the age eligibility threshold to receive the subsidy from 52 to 55. Using a within-cohort identification strategy, we show that men ineligible for the subsidy were more likely to leave the labour force. In terms of health outcomes, although we do not report impacts on hospitalizations when considering the whole sample, we do find significant results when we separate the analysis by main diagnosis and gender. More specifically, we show a reduction by 12.9% in hospitalizations due to injuries as well as a drop by 2 percentage points in the probability of a mental health diagnosis for men who were eligible for the LTU subsidy. Our results highlight the role of long-term unemployment benefits as a protecting device for the health (both physical and mental) of middle aged, low educated men who are in a disadvantaged position in the labour market.

Suggested Citation

  • José Ignacio Garcia-Pérez & Manuel Serrano-Alarcón & Judit Vall Castelló, 2020. "Long-term unemployment subsidies and middle-age disadvantaged workers’ health," Working Papers 2020/16, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2020-16
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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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