DP7420 The Public Health Costs of Job Loss

Author(s): Andreas Kuhn, Rafael Lalive, Josef Zweim├╝ller
Publication Date: August 2009
Keyword(s): Health, Job loss, Plant closure, Social cost of unemployment
JEL(s): I12, I19, J28, J65
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7420

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.