| Abstract: | Objectives. We assessed the impact of unemployment benefit programs on the health of the unemployed.Methods. We linked US state law data on maximum allowable unemployment benefit levels between 1985 and 2008 to individual self-rated health for heads of households in the Panel Study of Income Dynamics and implemented state and year fixed-effect models.Results. Unemployment was associated with increased risk of reporting poor health among men in both linear probability (b = 0.0794; 95% confidence interval CI] = 0.0623, 0.0965) and logistic models (odds ratio = 2.777; 95% CI = 2.294, 3.362), but this effect is lower when the generosity of state unemployment benefits is high (b for interaction between unemployment and benefits = −0.124; 95% CI = −0.197, −0.0523). A 63% increase in benefits completely offsets the impact of unemployment on self-reported health.Conclusions. Results suggest that unemployment benefits may significantly alleviate the adverse health effects of unemployment among men.An extensive body of research has linked job loss to poorer physical and mental health1 and higher risk of premature death.2 Recent literature has focused on establishing the causal nature of this association,2–8 but few studies have explored whether specific social programs modify the health effects of job loss. Understanding the impact of policies is useful for identifying intervention approaches to reduce the harms associated with unemployment, but they may also reveal some of the mechanisms explaining the association between job loss and health. Job loss is associated with a substantial loss in earnings.9 If earnings losses are the primary mechanism linking job loss to health, we would expect generous unemployment benefit programs to mitigate some of the negative consequences of job loss on health. On the other hand, unemployment benefits may be less effective if job loss influences health primarily through nonfinancial mechanisms, such as the loss of a time structure for the day, decreased self-esteem, chronic stress,10 or changes in health-related behavior.A few studies have investigated the association between unemployment benefit receipt and self-reported health measures.11–13 For example, Rodriguez11 analyzed self-reported health data from Britain, Germany, and the United States and found that unemployed workers in receipt of unemployment benefits do not have statistically higher likelihood of reporting poor health compared with the employed, while unemployed workers receiving no benefits are in worse health than these 2 groups. She concluded that benefit receipt moderates the association between unemployment and poor subjective health. Similarly, McLeod et al.14 found that unemployed US workers not receiving benefits are more likely to report poor health than employed workers, but the health of unemployed workers in receipt of benefits does not statistically differ from the health of employed workers. The association between receiving benefits and health was most pronounced among low-skilled unemployed workers, who appear to gain substantially from receipt of cash benefits.A key caveat in these studies is that they do not account for selection into benefit receipt, a bias that could lead to either over- or underestimation of effects. For example, if those who lose their jobs are healthier and more likely to be eligible for and receive unemployment benefits, the health benefits of unemployment benefits will be overestimated. During the recent recession, for example, non-Hispanic White race, higher educational level, and being married, characteristics associated with better health, also predicted receipt of benefits among long-term unemployed workers.15 On the other hand, job losers in poor health may anticipate longer-term spells of unemployment and therefore may be more likely to claim unemployment benefits than healthier individuals who expect to quickly find new employment. While 61% of workers in manufacturing and 66% of workers in construction were receiving benefits in the period 2008 to 2011, only 52% of professional and management workers and 49% of workers in the retail trade industry were receiving benefits in the same period.15 These findings suggest that selection is a serious source of potential bias in the relationship between unemployment benefit receipt and health, though the direction of bias is unclear.In the United States, the Federal–State Unemployment Insurance Program provides temporary wage replacement for eligible workers who become unemployed through no fault of their own. Although all states must follow general rules established at the federal level relating to coverage and eligibility, each state operates its own program. As a result, there is considerable variation in the generosity of unemployment benefit programs across states and over time. An approach to account for selection is to exploit these variations in the generosity of unemployment benefit programs to understand their effects on the health of workers. The assumption is that changes in unemployment benefit policy are uncorrelated with a worker’s health or other characteristics, as individuals have no control over the policy at the time they experience job loss. Variations in unemployment benefit generosity across states and over time, therefore, offer a unique natural experiment to estimate the impact of this policy on the health of unemployed workers.In a recent study, Cylus et al. exploited these variations to assess whether unemployment benefits moderate the relationship between aggregate unemployment rates and suicide,16 which are known to increase during recessions.17,18 Findings from this study suggest that more generous unemployment benefits are associated with a weaker effect of recessions on suicide. However, this study was based on aggregate data and did not estimate whether unemployment benefits reduced the negative impact of job loss among unemployed workers or whether benefits might in fact lead to improvements in mental health among both employed and unemployed workers, for example, by reducing the stress associated with the fear of job loss.19 Likewise, it is not clear whether results for suicide are applicable to self-rated health, a measure that combines elements of both physical and mental health, and a strong predictor of mortality.20In this study, we assessed the impact of unemployment benefit programs on the health of the unemployed. We hypothesized that income from unemployment benefits reduces psychological and physical morbidity among displaced workers such that individuals losing their job at a time of more generous unemployment benefit policies will suffer fewer health consequences than comparable individuals losing their jobs during years of lower benefit generosity. By focusing on unemployment benefit program generosity at the state level, we circumvent the bias generated by selection into benefits in the aforementioned studies.21,22 To identify this effect, we exploited variation in state unemployment benefit program generosity across US states and linked these to longitudinal individual-level data. |
