The Public Health Costs of Unemployment

Andreas Kuhn, Rafael Lalive () and Josef Zweimüller ()

Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP

Abstract: This paper studies how unemployment affects public health costs. We use plant closure as an instrument for unemployment because bankruptcy is unlikely to be caused by deteriorating health but has a strong impact on workers' subsequent employment. The empirical analysis is based on an extremely rich data set with comprehensive information on various types of health care costs and day-by-day work history of individual workers. Our central findings are (i) expenditures on medical treatments are not strongly affected by joblessness, (ii) lack of employment reduces mental health for men but not for women, and (iii) sickness benefit payments strongly increase due to job loss. Our results also show that OLS estimates strongly overestimate the causal effect of unemployment on public health costs.

Keywords: social cost of unemployment; health; non-employment; plant closure (search for similar items in EconPapers)
JEL-codes: I12 I19 J28 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-lab
Date: 2007-07
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Persistent link: http://EconPapers.repec.org/RePEc:lau:crdeep:07.08

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