DP15605 The Long-Term Impact of the COVID-19 Unemployment Shock on Life Expectancy and Mortality Rates

Author(s): Francesco Bianchi, Giada Bianchi, Dongo Song
Publication Date: December 2020
Keyword(s): COVID-19, Life Expectancy, Mortality, Unemployment rate
JEL(s): C32, E32, I14, J11
Programme Areas: Public Economics, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15605

We adopt a time series approach to investigate the historical relation between unemployment, life expectancy, and mortality rates. We fit a Vector-autoregression (VAR) for the overall US population and for groups identified based on gender and race. We find that shocks to unemployment are followed by statistically significant increases in mortality rates and declines in life expectancy. We use our results to assess the long-run effects of the COVID-19 economic recession on mortality and life expectancy. We estimate the size of the COVID-19-related unemployment to be between 2 and 5 times larger than the typical unemployment shock, depending on race/gender, resulting in a 3.0% increase in mortality rate and a 0.5% drop in life expectancy over the next 15 years for the overall American population. We also predict that the shock will disproportionately affect African-Americans and women, over a short horizon, while white men might suffer large consequences over longer horizons. These figures translate in a staggering 0.89 million additional deaths over the next 15 years.