What explains the negative effect of unemployment on health? An analysis accounting for reverse causality

The unemployed are often in poorer health than their employed counterparts. This cross-sectional correlation is often attributed to a causal effect of unemployment on health. Recent research analyzing longitudinal data often supports alternative explanations, such as spurious correlation and/or sele...

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Bibliographic Details
Published in:Research in social stratification and mobility Vol. 55; pp. 25 - 39
Main Authors: Krug, Gerhard, Eberl, Andreas
Format: Journal Article
Language:English
Published: Elsevier Ltd 01.06.2018
Subjects:
Dynamic panel estimator
Health
Income
Reverse causality
Social capital
Social status
Unemployment
Social status
Health
Income
Dynamic panel estimator
Reverse causality
Unemployment
Social capital
ISSN:0276-5624, 1878-5654
Online Access:Get full text
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Summary:The unemployed are often in poorer health than their employed counterparts. This cross-sectional correlation is often attributed to a causal effect of unemployment on health. Recent research analyzing longitudinal data often supports alternative explanations, such as spurious correlation and/or selection of unhealthy workers into unemployment (i.e., reverse causality). In this paper, we apply a dynamic panel data estimator (system GMM) to account for both unobserved confounders and reverse causality. Despite some evidence for health selection, we still find strong support for the causality thesis. Furthermore, we show that the adverse health effect is partially explained by the loss of self-perceived social status due to unemployment but not by the loss of household income or social contacts.
ISSN:0276-5624
1878-5654
DOI:10.1016/j.rssm.2018.03.001