The Lasting Health Impact of Leaving School in a Bad Economy: Britons in the 1970s Recession

This paper investigates whether leaving school in a bad economy deteriorates health in the long run. It focuses on low‐educated individuals in England and Wales who entered the labour market immediately after the 1973 oil crisis. Our identification strategy relies on the comparison of individuals who left school at the compulsory age, were born in the same year and had a similar quantity of education – but whose school‐leaving behaviour in different years (hence, different economic conditions) was exogenously implied by compulsory schooling laws. We provide evidence that, unlike school‐leavers who did postpone their entry into the labour market during the recessions of the 1980s and 1990s, pupils' decisions to leave school at the compulsory age immediately after the 1973 oil crisis were not endogenous to the contemporaneous economic conditions at labour‐market entry. We use a repeated cross section of individuals over the period 1983–2001 from the General Household Survey and adopt a lifecourse perspective, from 7 to 26 years after school‐leaving. Our results show that poor economic conditions at labour‐market entry are particularly damaging to women's health. For men, the health impact of poor economic conditions at labour‐market entry is less obvious and not robust to all specifications. Copyright © 2016 John Wiley & Sons, Ltd.