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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," Economics working papers 2020-26, Department of Economics, Johannes Kepler University Linz, Austria.
    • Handle: RePEc:jku:econwp:2020-26
    Note: English
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    3. Felix Glaser & Gerald J. Pruckner, 2023. "A hard pill to swallow? Parental health shocks and children's mental health," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2768-2800, December.
    4. 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).
    5. Corazza, Ilaria & Pennucci, Francesca & De Rosis, Sabina, 2021. "Promoting healthy eating habits among youth according to their preferences: Indications from a discrete choice experiment in Tuscany," Health Policy, Elsevier, vol. 125(7), pages 947-955.
    6. Barili, E. & Bertoli, P. & Grembi, V. & Rattini, V., 2021. "COVID Angels Fighting Daily Demons? Mental Health of Healthcare Workers and Religion," Health, Econometrics and Data Group (HEDG) Working Papers 21/05, HEDG, c/o Department of Economics, University of York.
    7. Heather Kolakowski & Mardelle McCuskey Shepley & Ellie Valenzuela-Mendoza & Nicolas R. Ziebarth, 2021. "How the COVID-19 Pandemic Will Change Workplaces, Healthcare Markets and Healthy Living: An Overview and Assessment," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    8. Fischer, Martin & Karlsson, Martin & Prodromidis, Nikolaos, 2021. "Long‐term Effects of Hospital Deliveries," CINCH Working Paper Series (since 2020) 74712, Duisburg-Essen University Library, DuEPublico.

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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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