Chance of Death Increases After Losing a Job

Daniel Sullivan, a Fed economist, and Till von Wachter of Columbia have an interesting paper out showing that the annual chance of dying increases by 15-20 percent after getting laid off.

Sullivan and von Wachter looked at a sample of employees who lost their jobs due to mass layoffs in Pennsylvania in the late 1970's and early 1980's. The reasons why those affected by layoffs might have a higher chance of dying are fairly obvious: reduced earnings, consumption, access to healthcare, and self-esteem have all been linked to higher death rates.

Healthcare Economist attended a presentation of an earlier version of this paper back in April and he adds some caveats:

This paper does have a few problems. First, is that it only examines individuals with at least six years of tenure at their employer, when they were fired. Limiting the sample in this way reduces the generalizability of the study. Also, since the data has no information on health insurance, the researchers can not test whether the loss of health insurance had an impact on health (since COBRA was passed in 1985, many of the individuals in the study likely lost their health insurance after the layoff). Further, the analysis takes place in a partial equilibrium setting. It is likely that mass layoffs in one firm will lead to either: 1) increases in hiring in other firms in the same industry, or 2) increases in hiring at firms in other industries. Thus, in a more general equilibrium analysis, job losses hurt some workers, but benefit others . Those workers who are hired at the other firms may experience a decrease in mortality. Long run evidence tends to show that Schumpeter's concept of "creative destruction" has decreased average mortality for individuals all over the world due to rising living standards.