Article

The Public Health Costs of Job Loss

Institute for Empirical Research in Economics, University of Zurich, and IZA, Switzerland.
Journal of Health Economics (Impact Factor: 2.58). 09/2009; 28(6):1099-115. DOI: 10.1016/j.jhealeco.2009.09.004
Source: PubMed

ABSTRACT

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 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 are not strongly affected by job displacement; (ii) job loss significantly increases expenditures for antidepressants and related drugs, as well as for hospitalizations due to mental health problems for men (but not for women) although the effects are economically rather small; and (iii) sickness benefits strongly increase due to job loss.

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    • "Medicine and psychology studies suggest that emotional reactions to life events can affect physiology in ways that are damaging for health (Rozanski et al, 1999; Kuhn et al, 2009). But also the relationship between job loss, depression, and poor health conditions seems to be well established by several studies (Clark and Oswald, 1994; Kuhn et al, 2009). Lyubomirsky et al (2005) found that subjective well-being is a protective factor for health. "
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    • "In our study, the available data on jobrelated injuries allows us to analyze the direct impact of displacement on injury rates, by making the reasonable assumption that workers do not voluntarily become injured. A second study (Kuhn et al., 2009) analyzes the e¤ect of plant closure on the taking-up of health provisions and on the utilization of sickness bene…ts by displaced workers comparing them to a control group of nondisplaced workers. The authors report an increase in health costs for displaced workers, which is mainly caused by an increase in the amount of sickness bene…ts paid. "
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    • "Not considering the potential negative externalities on spouses might result in underestimating the public health costs of job loss (e.g. Kuhn et al. 2009). This study contributes to our understanding of spillover effects of unemployment on other household members by estimating the effect of unemployment on the spouse's mental health. "
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