The Long-Term Impact of Involuntary Unemployment and Economic Cycles on Health in 13 European Countries: Do Unemployment Benefits Make a Difference?

Mauricio Avendano, London School of Economics and Political Science (LSE) and Harvard School of Public Health

Unemployment is associated with poorer health, but at the aggregate level, higher unemployment rates are associated with better health. We simultaneously examine the long-run impact of involuntary unemployment and macroeconomic fluctuations over the life-course on illness, and explore the role of unemployment benefit (UB) policies. We link employment histories for adults in 13 countries from the Retrospective Survey of Health, Ageing and Retirement in Europe to unemployment and UB replacement rates during 1970-2008. We implement a country-fixed effect Cox Proportional Hazard model with time-dependent covariates. Results suggest contrasting patterns by gender: involuntary unemployment increases illness risk among men, while business cycles negatively influence men’s health if experienced under low UB provisions. Although unemployment and business cycles do not influence women’s health, higher UB provisions over the life-course reduce illness risk. Results stress the role of unemployment benefit policies in shaping the long-run impact of unemployment and business cycles on health.