The Health Consequences of Job Loss: Evidence from Norway

Keynesians,  this new NBER paper will resonate.

Losing Heart? The Effect of Job Displacement on Health

Sandra Black, Paul Devereux and Kjell Salvanes

NBER Working Paper No. 18660
Issued in December 2012
NBER Program(s):   HE   LS

Job reallocation is considered to be a key characteristic of well-functioning labor markets, as more productive firms grow and less productive ones contract or close. However, despite its potential benefits for the economy, there are significant costs that are borne by displaced workers. We study how job displacement in Norway affects cardiovascular health using a sample of men and women who are predominantly aged in their early forties. To do so we merge survey data on health and health behaviors with register data on person and firm characteristics. We track the health of displaced and non-displaced workers from 5 years before to 7 years after displacement. We find that job displacement has a negative effect on the health of both men and women. Importantly, much of this effect is driven by an increase in smoking behavior. These results are robust to a variety of specification checks.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

6 thoughts on “The Health Consequences of Job Loss: Evidence from Norway”

  1. Job reallocation is considered to be a key characteristic of well-functioning labor markets…However, despite its potential benefits for the economy, there are significant costs that are borne by displaced workers.

    That about says it all, no?

  3. Why is concern for the human impact of unemployment specifically Keynesian? I agree that this is often the case, but there’s no doctrinal logic to the association.

    1. An economist weighs costs and benefits associated with low interest rates, low deficits and low unemployment (among other things). Anything that tips the scale toward the importance of lowering unemployment lends support to a Keynesian approach.

      Maybe that doesn’t qualify as “doctrinal logic,” but I think it’s enough to justify the link that Professor Kahn asserts here.

    2. I think it is the distinction between a “necessary evil” and an “unnecessary cost.” Keynesians would argue the latter is true during recessions (although not necessarily at other times); non-Keynesians might argue that that the former is likely always true.

  4. We find that job displacement has a negative effect on the health of both men and women.

    I guess it’s nice to have some numbers supporting an obvious reality.
    That is, if reality and numbers can modify one’s Weltanschauung and moderate one’s particular Kulturkampf.
    But as Mr. David Brooks wrote the other day, that’s doubtful:

    Can current Republicans change their underlying mentality to adapt to these realities? Intellectual history says no. People almost never change their underlying narratives or unconscious frameworks. Moreover, in the South and rural West, where most Republicans are from, the Encroachment Story has deep historic and psychological roots. Anti-Washington, anti-urban sentiment has characterized those cultures for decades.

    http://www.nytimes.com/2013/01/29/opinion/brooks-a-second-g-o-p.html?smid=pl-share

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