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The health externalities of downsizing

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  • Alexander Ahammer
  • Dominik Grübl
  • Rudolf Winter-Ebmer

Abstract

TWe show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on highquality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.

Suggested Citation

  • Alexander Ahammer & Dominik Grübl & Rudolf Winter-Ebmer, 2020. "The health externalities of downsizing," CDL Aging, Health, Labor working papers 2020-05, The Christian Doppler (CD) Laboratory Aging, Health, and the Labor Market, Johannes Kepler University Linz, Austria.
    • Handle: RePEc:jku:cdlwps:wp2005
    Note: English
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    7. Abeliansky, Ana Lucia & Beulmann, Matthias & Prettner, Klaus, 2024. "Are they coming for us? Industrial robots and the mental health of workers," Research Policy, Elsevier, vol. 53(3).
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    More about this item

    Keywords

    Downsizing; mass layoffs; health; job insecurity;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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