Recessions and Health Revisited: New Findings for Working-Age Adults

There has been a series of influential papers documenting that state level mortality rates are strongly procyclical.  In other words, recessions are good for people’s health.  These papers found that the cause of death was important: deaths by non-cancer health related causes of death were significantly reduced in recessions (cancer deaths were not affected), whereas suicides did increase during recessions.  More importantly, these papers found that the largest effects were for the elderly.   Recent work on the topic suggests that the mechanism by which recessions decrease mortality rates is through nursing homes and other health providers being able to hire higher quality staff than they would otherwise be able to during a period of economic growth.

This paper makes two important contributions to this literature.  First, we focus entirely on the mortality of working-age adults.  It is possible that the effect of mortality on a working aged population could be different than that of the elderly, and because the elderly die with higher frequency, the effect of recessions on mortality felt by younger parts of the population would be masked by the large magnitude of the effect on the elderly.  Pulling out a separate effect for the younger population is important because even though there are fewer deaths which a recession would influence, each death in the younger population represents a large amount of lost quality adjusted life years.

The second contribution is that in addition to looking at the impact of the state-wide unemployment rate on mortality, we also look at how unemployment rates for groups with different levels of educational attainment affect mortality rates for those groups.  It is important to estimate the effect of these two different unemployment rates at the same time.  The effect of the global economic condition in the state could have a very different impact on health than the effect of unemployment in your education class.  The first captures effects of having a bad economy such as better quality staff available for home health care.  The second captures effects of an increased chance of a person being individually unemployed such as losing employer provided health insurance.

Using the Current Population Survey and Vital Statistics Mortality Files – the same data sources used in the previous literature – we find that though higher unemployment at the state level is associated with reduced mortality, increased unemployment for a specific education class is associated with increased mortality for that education class.  The second result is robust to many different fixed effects specifications, whereas the first is not.  This suggests that though an overall economic downturn may be good for those not specifically affected; those who are likely to lose their jobs face increased mortality rates.  We also find that this result holds for all health related causes of death, including cancer, a cause of death not found to be reactive for the elderly.  This suggests that loss of health insurance and with it preventative and diagnostic care is a channel through which our results are working.