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Addressing the unemployment-mortality conundrum: Non-linearity is the answer

Listed author(s):
  • Giorgio Bonamore
  • Fabrizio Carmignani
  • Emilio Colombo

The effect of unemployment on mortality is the object of a lively literature. However, this literature is characterized by sharply conflicting results. We revisit this issue and suggest that the relationship might be non-linear. We use regional (NUTS 2) data from 23 European countries to estimate a multivariate regression of mortality. The estimating equation allows for a quadratic relationship between unemployment and mortality. We control for various other determinants of mortality at regional and national level and we include region-specific and time-specific fixed effects. The model is also extended to account for the dynamic adjustment of mortality and possible lagged effects of unemployment. We find that the relationship between mortality and unemployment is U shaped. In the benchmark regression, when the unemployment rate is low, at 3%, an increase by one percentage point decreases average mortality by 0.7%. As unemployment increases, the effect decays: when the unemployment rate is 8% (sample average) a further increase by one percentage point decreases average mortality by 0.4%. The effect changes sign, turning from negative to positive, when unemployment is around 17%. When the unemployment rate is 25%, a further increase by one percentage point raises average mortality by 0.4%. Results hold for different causes of death and across different specifications of the estimating equation. We argue that the non-linearity arises because the level of unemployment affects the psychological and behavioural response of individuals to worsening economic conditions.

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File URL: http://dems.unimib.it/repec/pdf/mibwpaper281.pdf
File Function: First version, 2014
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Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 281.

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Length: 23
Date of creation: Oct 2014
Date of revision: Oct 2014
Handle: RePEc:mib:wpaper:281
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  1. Mikael Svensson, 2010. "Economic upturns are good for your heart but watch out for accidents: a study on Swedish regional data 1976-2005," Applied Economics, Taylor & Francis Journals, vol. 42(5), pages 615-625.
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  3. Erdal Tekin & Chandler McClellan & Karen Jean Minyard, 2013. "Health and Health Behaviors during the Worst of Times," NBER Working Papers 19234, National Bureau of Economic Research, Inc.
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  8. Garcy, Anthony M. & Vågerö, Denny, 2012. "The length of unemployment predicts mortality, differently in men and women, and by cause of death: A six year mortality follow-up of the Swedish 1992–1996 recession," Social Science & Medicine, Elsevier, vol. 74(12), pages 1911-1920.
  9. Svensson, Mikael, 2007. "Do not go breaking your heart: Do economic upturns really increase heart attack mortality?," Social Science & Medicine, Elsevier, vol. 65(4), pages 833-841, August.
  10. Tekin, Erdal & McClellan, Chandler & Minyard, Karen Jean, 2013. "Health and Health Behaviors during the Worst of Times: Evidence from the Great Recession," IZA Discussion Papers 7538, Institute for the Study of Labor (IZA).
  11. Deb, Partha & Gallo, William T. & Ayyagari, Padmaja & Fletcher, Jason M. & Sindelar, Jody L., 2011. "The effect of job loss on overweight and drinking," Journal of Health Economics, Elsevier, vol. 30(2), pages 317-327, March.
  12. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  13. Neumayer, Eric, 2004. "Recessions lower (some) mortality rates:: evidence from Germany," Social Science & Medicine, Elsevier, vol. 58(6), pages 1037-1047, March.
  14. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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