The lasting health impact of leaving school in a bad economy: Britons in the 1970s recession

This paper investigates whether leaving school in a bad economy deteriorates health in the long-run. It focuses on individuals in England and Wales who left full-time education in their last year of compulsory schooling immediately after the 1973 oil crisis. Unemployment rates sharply increased in the wake of the 1973 oil crisis, so that between 1974 and 1976, each school cohort faced worse economic conditions at labour-market entry than the previous one. Our identification strategy relies on the comparison of very similar pupils – born the same year and with a similar quantity of education (in months) – whose school-leaving behaviour in different economic conditions was exogeneouly implied by compulsory schooling laws. Unlike school-leavers who did postpone their entry on the labour market during the 1980s and 1990s recessions, we provide evidence that pupils’ decisions to leave school at compulsory age immediately after the 1973 oil crisis were not endogeneous to the contemporaneous economic conditions at labour market entry. We use a repeated cross section of individuals over 1983-2001 from the General Household Survey (GHS) and take a lifecourse perspective, from 7 to 26 years after school-leaving. Our results show that poor economic conditions at labour-market entry are particularly damaging to women’s health. Women who left school in a bad economy are more likely to report poorer health and to consult a general practitioner over the whole period under study (1983-2001). Additional evidence suggests that they are also more likely to suffer from a longstanding illness/disability over the whole period. As for men, the health impact of poor economic conditions at labour-market entry is more mixed, and not robust across all specifications. However, we never find that leaving school in a bad economy is beneficial to their health. Finally, our results show that leaving school in a bad economy does not have a lasting impact on labour-market outcomes from 7 to 26 years after school-leaving, neither for men, nor for women.