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The Public Health Costs of Job Loss

We study the short-run effect of involuntary job loss on comprehensive measures of public health costs. We focus on job loss induced by plant closure, thereby addressing the reverse causality problem of deteriorating health leading to job loss as job displacements due to plant closure are unlikely caused by workers' health status, but potentially have important effects on individual workers' health and associated public health costs. Our empirical analysis is based on a rich data set from Austria providing comprehensive information on various types of health care costs and day-by-day work history at the individual level. Our central findings are: (i) overall expenditures on medical treatments (hospitalizations, drug prescriptions, doctor visits) are not strongly affected by job displacement; (ii) job loss increases expenditures for antidepressants and related drugs, as well as for hospitalizations due to mental health problems for men (but not for women); and (iii) sickness benefits strongly increase due to job loss.

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Paper provided by The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria in its series NRN working papers with number 2009-13.

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Length: 41 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:jku:nrnwps:2009_13
Contact details of provider: Postal: NRN Labor Economics and the Welfare State, c/o Rudolf Winter-Ebmer, Altenbergerstr. 69, 4040 Linz
Phone: +43-732-2468-8216
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Web page: http://www.labornrn.at/
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  9. 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.
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  18. Arnaud Chevalier & Leon Feinstein, 2007. "Sheepskin or Prozac: The Causal Effect of Education on Mental Health," Working Papers 200715, Geary Institute, University College Dublin.
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  21. Björklund, Anders, 1984. "Unemployment and Mental Health: Some Evidence from Panel Data," Working Paper Series 120, Research Institute of Industrial Economics.
  22. 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.
  23. Daniel Sullivan & Till von Wachter, 2007. "Mortality, Mass-Layoffs, and Career Outcomes: An Analysis using Administrative Data," NBER Working Papers 13626, National Bureau of Economic Research, Inc.
  24. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
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  27. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 1996. "The psychological impact of unemployment and joblessness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(3), pages 333-358.
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