Does job insecurity deteriorate health? A causal approach for Europe.

a working paper (number 2013-01) by Eve Caroli (University Paris-Dauphine, LEDa-LEGOS, Paris School of Economics and IZA) and Mathilde Godard (CREST and University Paris-Dauphine, LEDa-LEGOS) published by the Paris School of Economics (February 2013)

Abstract

This paper estimates the causal effect of job insecurity on health in a sample of 22 European countries.

We rely on an original instrumental variable approach based on evidence that workers feel more insecure with respect to their job if employed in sectors with a high natural rate of layoff, but relatively less so if they live in a country where employment is strongly protected by the law. Using cross-country data from the 2010 European Working Conditions Survey, we show that when the potential endogeneity of job insecurity is not accounted for, the latter appears to deteriorate almost all health outcomes.

When tackling the endogeneity issue, the health-damaging effect of job insecurity is confirmed for a subgroup of health outcomes, namely self-rated health, being sick in the past 12 month, suffering from headaches or eyestrain and depression or anxiety.

As for other health variables, the impact of job insecurity appears to be insignicant at conventional levels.

JEL classification: I19, J28, J63

Full text (PDF 30pp)

---