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An Instrumental Variable Approach To Unemployment, Psychological Health And Social Norm Effects

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  • John Gathergood

Abstract

This empirical study presents estimates of the impact of unemployment on psychological health using UK household panel data. The causal impact of unemployment is established using instrumental variable methods. Psychological health is measured using both the General Household Questionnaire measure and also self‐reported data on individual occurrences of anxiety‐related conditions. We find evidence for positive selection into unemployment on the basis of poor psychological health. Nevertheless, panel instrumental variable estimates suggest a sizeable causal worsening of psychological health arising from unemployment. We also find evidence that the negative impact of unemployment can be largely mitigated by local labour market conditions: those entering unemployment in localities with higher unemployment rates suffer less deterioration in their psychological health. Copyright © 2012 John Wiley & Sons, Ltd.

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  • John Gathergood, 2013. "An Instrumental Variable Approach To Unemployment, Psychological Health And Social Norm Effects," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 643-654, June.
    • Handle: RePEc:wly:hlthec:v:22:y:2013:i:6:p:643-654
    DOI: 10.1002/hec.2831
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    3. Matteo Picchio & Michele Ubaldi, 2024. "Unemployment and health: A meta‐analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1437-1472, September.
    4. Paul Fiedler, 2021. "Worrying about Work? Disentangling the Relationship between Economic Insecurity and Mental Health," SOEPpapers on Multidisciplinary Panel Data Research 1145, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Marta Barazzetta, 2015. "The asymmetric effect of expectations on subjective well-being," Working Papers 374, ECINEQ, Society for the Study of Economic Inequality.
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    7. Cozzi, Guido & Galli, Silvia & Mantovan, Noemi, 2018. "Will a shrink make you richer? Gender differences in the effects of psychotherapy on labour efficiency," European Economic Review, Elsevier, vol. 109(C), pages 257-274.
    8. Vandoros, Sotiris & Avendano, Mauricio & Kawachi, Ichiro, 2019. "The association between economic uncertainty and suicide in the short-run," Social Science & Medicine, Elsevier, vol. 220(C), pages 403-410.
    9. Bubonya, Melisa & Cobb-Clark, Deborah A. & Wooden, Mark, 2014. "A Family Affair: Job Loss and the Mental Health of Spouses and Adolescents," IZA Discussion Papers 8588, Institute of Labor Economics (IZA).
    10. Taina Leinonen & Netta Mäki & Pekka Martikainen, 2017. "Trajectories of Antidepressant Medication before and after the Onset of Unemployment by Subsequent Employment Experience," PLOS ONE, Public Library of Science, vol. 12(1), pages 1-16, January.
    11. Melisa Bubonya & Deborah A. Cobb-Clark & Mark Wooden, 2017. "Job loss and the mental health of spouses and adolescent children," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-27, December.
    12. Dan K. Hsu & J. Robert Mitchell & Xian Cao, 2024. "Examining Psychological Mediators in Entrepreneurship: Experimental Designs, Remedies, and Recommendations," Entrepreneurship Theory and Practice, , vol. 48(1), pages 418-445, January.
    13. Joe Spearing, 2024. "The effect of retirement eligibility on mental health in the United Kingdom: Heterogeneous effects by occupation," Health Economics, John Wiley & Sons, Ltd., vol. 33(8), pages 1621-1648, August.
    14. Melisa Bubonya & Deborah A. Cobb-Clark & David C. Ribar, 2017. "The Bilateral Relationship between Depressive Symptoms and Employment Status," Melbourne Institute Working Paper Series wp2017n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    15. Martyna Kobus & Marcin Jakubek, 2015. "Youth unemployment and mental health: dominance approach. Evidence from Poland," IBS Working Papers 4/2015, Instytut Badan Strukturalnych.
    16. Maryam Safari & Jacqueline Birt & Yi Xiang, 2022. "The sociology of compensation inequality in upper‐echelon positions: evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2615-2649, June.
    17. Simonetta Longhi & Alita Nandi & Mark Bryan & Sara Connolly & Cigdem Gedikli, 2018. "Unhappiness in unemployment – is it the same for everyone?," Working Papers 2018007, The University of Sheffield, Department of Economics.
    18. Jianbo Luo, 2020. "A Pecuniary Explanation for the Heterogeneous Effects of Unemployment on Happiness," Journal of Happiness Studies, Springer, vol. 21(7), pages 2603-2628, October.
    19. Siegel, Martin & Vogt, Verena & Sundmacher, Leonie, 2014. "From a conservative to a liberal welfare state: Decomposing changes in income-related health inequalities in Germany, 1994–2011," Social Science & Medicine, Elsevier, vol. 108(C), pages 10-19.
    20. Eleftherios Giovanis & Oznur Ozdamar, 2023. "Instrumental variables in structural equation modelling: an application on the impact of labour factors on health and standard of livings," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 32(4), pages 1083-1121, October.
    21. Loretta G. Platts, 2015. "A prospective analysis of labour market status and self-rated health in the UK and Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 343-370, April.
    22. Schiele, Valentin & Schmitz, Hendrik, 2016. "Quantile treatment effects of job loss on health," Journal of Health Economics, Elsevier, vol. 49(C), pages 59-69.
    23. Been, J.; & Suari-Andreu, E.; & Knoef, M.;, 2022. "The short-run effects of unexpected job loss on health," Health, Econometrics and Data Group (HEDG) Working Papers 22/21, HEDG, c/o Department of Economics, University of York.

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