Addressing the unemployment-mortality conundrum: Non-linearity is the answer

Giorgio Bonamore, Fabrizio Carmignani () and Emilio Colombo

No 281, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: The effect of unemployment on mortality is the object of a lively literature. However, this literature is characterized by sharply conflicting results. We revisit this issue and suggest that the relationship might be non-linear. We use regional (NUTS 2) data from 23 European countries to estimate a multivariate regression of mortality. The estimating equation allows for a quadratic relationship between unemployment and mortality. We control for various other determinants of mortality at regional and national level and we include region-specific and time-specific fixed effects. The model is also extended to account for the dynamic adjustment of mortality and possible lagged effects of unemployment. We find that the relationship between mortality and unemployment is U shaped. In the benchmark regression, when the unemployment rate is low, at 3%, an increase by one percentage point decreases average mortality by 0.7%. As unemployment increases, the effect decays: when the unemployment rate is 8% (sample average) a further increase by one percentage point decreases average mortality by 0.4%. The effect changes sign, turning from negative to positive, when unemployment is around 17%. When the unemployment rate is 25%, a further increase by one percentage point raises average mortality by 0.4%. Results hold for different causes of death and across different specifications of the estimating equation. We argue that the non-linearity arises because the level of unemployment affects the psychological and behavioural response of individuals to worsening economic conditions.

Keywords: unemployment; economic crisis; mortality; Europe (search for similar items in EconPapers)
JEL-codes: I15 J64 (search for similar items in EconPapers)
Pages: 23
Date: 2014-10, Revised 2014-10
New Economics Papers: this item is included in nep-eur, nep-hea and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Addressing the unemployment–mortality conundrum: Non-linearity is the answer (2015)
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