Job loss does not cause ill health
Inhalt
I use longitudinal data from the Health and Retirement Study to estimate the effect of job
loss on health for near elderly employees. Job loss is a major cause of economic
insecurity for working age individuals, and can cause reduction in income, and loss of
health insurance. To control for possible reverse causality, this study focuses on people
who were laid off for an exogenous reason - the closure of their previous employers’
business. I find that the unemployed are in worse health than employees, and that health
reasons are a common cause of job termination. In contrast, I find no causal effect of
exogenous job loss on various measures of health. This suggests that the inferior health of
the unemployed compared to the employed could be explained by reverse causality. I also
use instrumental variable regression to estimate the effect of loss of health insurance, loss
of income, and re-employment on health, and again find no statistically significant
effects.
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