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February 25, 2013 9:35 AM The Health Consequences of Job Loss: Evidence from Norway

By Matthew Kahn

Keynesians, this new National Bureau of Economic Research 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.

[Cross-posted at The Reality-based Community]

Matthew Kahn is a professor at the University of California, Los Angeles's Institute of the Environment. He specializes in the environmental consequences of urban growth and related quality-of-life issues.