Job Loss and Health

A vast literature has examined the relationship between job loss and health outcomes, uniformly finding that the effect of job loss on health is negative. This study exploits mass layoffs to credibly estimate the effect of job loss on multiple outcomes of mental and health well-being. Using an instrumental variables research design, I find that job loss reduces subjective well-being, and other measures of self-reported health status such as mental and physical health. Further, I find that the magnitude of these effects show considerably heterogeneity by race and socioeconomic status. Overall, the policy implications of this study are that it reinforces the stylized facts of the literature on job loss as being harmful for well-being and quantifies the psychic and mental costs of job loss using new outcomes.