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Health and Unemployment During a Negative Labor Demand Shock
Espen Bratberg1, Tor Helge Holmås2, Egil Kjerstad2
1University of Bergen, Bergen, Norway.
Pre-existing health conditions worsen unemployment risks during economic downturns, especially for women and younger workers. Poor health can also increase reliance on social insurance, acting as a substitute for unemployment benefits.
Area of Science:
- Economics
- Public Health
- Sociology
Background:
- The link between unemployment and health is established, but causal pathways are not fully understood.
- Adverse labor market shocks can disproportionately affect individuals with pre-existing health conditions.
Purpose of the Study:
- To investigate how pre-existing health conditions amplify the impact of labor market shocks.
- To analyze the heterogeneous effects of health on unemployment susceptibility across demographic and occupational groups.
Main Methods:
- Utilized quasi-experimental variation in local unemployment rates triggered by a petroleum price shock in Norway.
- Conducted heterogeneity analysis based on gender, age, education, and job type.
Main Results:
- Workers with compromised health face a significantly higher risk of unemployment during economic downturns.
- Females and younger workers exhibit greater sensitivity to health-related unemployment.
- Higher education and white-collar jobs are associated with amplified health-driven unemployment effects.
Conclusions:
- Pre-existing health conditions are a critical factor in unemployment vulnerability during economic shocks.
- Social insurance uptake, particularly health-related benefits, can substitute for unemployment benefits among certain demographics.
- Findings highlight the complex interplay between health, employment, and social welfare policies.
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