Lethal Layoffs: Understanding the Mortality Effects of Job Loss - PowerPoint PPT Presentation

Lethal Layoffs: Understanding the Mortality Effects of Job Loss Christina Gathmann, Kristiina Huttunen and Robin Stitzing Aalto University May 17, 2013 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Motivation Strong correlation between socioeconomic status and health Contradictory evidence from studies on macroeconomic conditions and micro-level studies Recessions are good for your health (Ruhm, 2000) Job displacement increases mortality especially for prime-age male workers (Eliason and Storrie, 2007, Sullivan and von Wachter, 2009, Browning and Heinesen, 2012 ). Martikainen, M¨ aki and J¨ antti (2007) find no mortality effects for working in downsizing establishments in Finland Methods and time periods vary We still know little about the mechanism beyond job loss and mortality Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

This Study Examine the effect of job displacement on cause-specific mortality in Finland during a period of large business cycle-fluctations (1988-2009) Investigate how effect of job displacement vary with business cycle conditions. 1991-1993: Deepest economic contraction in an industrialized country since the 1930s (see Gorodnichenko et al. AER 2012) Estimate the effect on various different outcomes: earnings, joint family income, employment, divorce Make distinction between own and spousal job loss Aim to produce comparable estimates to previous studies Today’s talk focuses on recession period Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Why Does Job Loss Affect Mortality? Lower income (+) Large literature has documented that displaced workers suffer long-lasting income reductions (e.g. Sullivan, Jaconson and Lalonde, 1994). Worse nutrition, limited access to health care Lower employment (+/-) More time to exercise, less work-induced stress, loss of self-esteem Increased risk of marital dissolution (+) Kerwin and Stephens (2004), Eliason (2012) Change in health behaviour (+) Recent study by Black, Devereux and Salvanes (2013) documents that job displacement increases smoking Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Data 1/3 random sample of Finnish longitudinal employer-employee data for 1988-2009 All 16 - 74 year old Finnish residents Worker, plant, firm and spouse codes We can follow individuals in and out of labor force Merge with cause-of-death records Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Plant Closure Sample 20-49 year old workers working in plants with at least 10 workers in base year t (1991-1993) Displaced worker: workers whose plant closed down between t and t+1 (and early-leavers) Non-displaced worker: workers whose plant did not closed down between t and t+1 Follow each worker (and his/her spouse) at least 3 years before base year t until 15th year after job loss Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Mass Layoff Sample 20-49 year old workers working in plants with at least 50 workers in base year t (1991-1993) Displaced worker: workers who separated from plants that closed down or downsized more than 30 percent between t and t+1 (and early-leavers) Non-displaced worker: workers whose plant did not closed down or who did not separate from donsizing plants between t and t+1 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Annual Income Males 40 Annual Income in 1000 euros 30 20 10 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Time since Displacement Displaced Nondisplaced Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Annual Income Females 30 Annual Income in 1000 euros 20 10 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Time since Displacement Displaced Nondisplaced Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Sample Means of Pre-Displacement Characteristics: Plant Closures Males Females Variable Non- Displaced Non- Disp. Displaced Displaced Age 36.76 36.34 36.38 36.42 Education Compulsory .26 .26 .32 .30 Secondary .45 .40 .39 .33 Tertiary .29 .34 .28 .35 Annual Inc. t=0 32923 33979 23683 24312 Annual Inc. t=-3 30358 31549 21156 21853 Plant Size 521 137 527 115 Tenure 2.96 2.52 2.84 2.57 Has a spouse .77 .75 .74 .74 Outcomes Dead by t+2 .0017 .0042 .0007 .0009 Dead by t+15 .0249 .0254 .0127 .0143 Observations 295208 1648 200683 1047 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Empirical Specification I p ibt ln ( ) = X ib β + D ibt δ + τ bt + ǫ it (1) 1 − p ibt where p itb is the probability of worker i in base year sample b dying by the year t D ibt is a dummy for displacement prior to year t X ib is a vector of worker, spouse or region (predisplacement) characteristics τ tb is base-year dummy Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Empirical Specification II 15 � Y ibt = X ib β + D ibt − j δ j + τ bt (+ α ib ) + ǫ ibt (2) j = − 3 where Y ibt is the outcome (e.g. earnings, family income, probability of dying, cumulative mortality) for individual i in base year sample b at time (since base year) t D ibt − j is a dummy for loosing a job j periods ago X ib is a vector of worker, spouse or region (predisplacement) characteristics τ tb is baseyear-time dummies α ib is baseyear-specific individual fixed-effect. Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Income Males 2000 Annual Income 1000 euros 0 -2000 -4000 -6000 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Time Since Displacement 95 % Conf. Int. OLS Coef. Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Income Females 2000 Annual Income 1000 euros 0 -2000 -4000 -6000 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Time Since Displacement 95 % Conf. Int. OLS Coef. Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Mortality: Logistic Model, High Tenure Workers Dependent Variable: Dead by t+15 Male Female Variable Spec. 1 Spec. 2 Spec1 Spec2. Mass Layoffs 0.169* 0.131 0.043 0.057 (0 .080) (0.081) (0.143) (0.117) Observations 132034 131260 83712 83388 Plant Closures 0.230* 0.228 -0.213 -0.279 (0 .136) (0.136) (0.295) (0.307) Observations 193159 191962 134383 133829 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Mortality: Logistic Model, Mass Layoffs Dependent Variable: Dead by the year t+2 or t+15 High Tenure All Variable t+2 t+15 t+2 t+15 Males Mass Layoffs 0.406 0.131 0.271 0.086 (0.265) (0.081) (0.231) (0.067) Observations 124843 131260 181295 83388 Females Mass Layoffs -0.053 0.057 -0.318 0.0084 (0.515) (0.117) (0.503) (0.117) Observations 59583 83388 103179 127449 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Mortality: Logistic Model, Plant Closures Dependent Variable: Dead by the year t+2 or t+15 Males Females Variable t+2 t+15 t+2 t+15 Males Plant Closures 0.094 0.184 -0.304 -0.005 (0.425) (0.109) (1.013) (0.205) Observations 281768 278531 191082 208471 Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Effect of Job Displacement on Cause-Specific Mortality High Tenure Males Dependent Variable: Cause-specific death by t+15 Variable Alcohol Heart Accidents Suicides Mass Layoffs -0.0053 0.0598 0.157 -0.005 (0.239) (0.155) (0.225) (0.239) Plant Closures 0.256 0.355 0.132 0.256 (0.340) (0.250) (0.379) (0.340) Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Next Include older workers Extend to other periods Investigate the effect of spousal job loss Disentangle the income effect from employment ending Other outcomes: Family Income, Divorce Probability, Employment Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss

Conclusions Long-lasting severe earning losses for workers displaced in deep recession Modest mortality effects for male workers Workers displaced in recession years very similar to other workers Christina Gathmann, Kristiina Huttunen and Robin Stitzing Lethal Layoffs: Understanding the Mortality Effects of Job Loss