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Economic Cycles, Employment and Health: Disentangling Causal Pathways in a Cross-National Study

Final Report Summary - HEALTHCYCLE (Economic Cycles, Employment and Health: Disentangling Causal Pathways in a Cross-National Study)

Research in economics suggests that physical health deteriorates during economic expansions while improving during economic recessions. By contrast, research in epidemiology, sociology and psychology suggests that individual job loss and job insecurity are associated with poorer physical and mental health. The aim of this project is to advance understanding by exploring the individual mechanisms that link economic recessions to health and identify the potential policies to protect individual health from the negative effects of economic downturns.

The project exploits historical fluctuations in the economy in European countries and the United States over the last 50 years. It uses unique longitudinal survey data for representative samples of older people in Europe and the United States. These data are linked to historical data on economic indicators at the national or US state level over the last 50 years. Based on this novel database, the project has extensively examined the long-run impact of recessions on late-life health. Our studies suggest that recessions experienced during mid-life (ages 16 to 49) have long-lasting effects on health at old age. We were able to show that recessions experienced at ages 45-49 among men and 25-44 among women are associated with declining cognitive function in later-life. Exploring the mechanisms, we found that recessions at ages 45-49 increased the risk of being laid-off among men, whereas among women, recessions at ages 25-44 led to weaker labour market attachment and downward occupational mobility. We also find that economic conditions during the critical age of transition from school or college to labour market entrance are associated with several labour market, marriage, fertility, and health behaviour outcomes, which impact upon an individual’s health at old age. Similarly, we show that a recession experienced during the years leading up to retirement increases the risk of a heart attack or stroke in the post-retirement period. These findings suggest that policies that focus on these critical periods may promote later-life cognitive and physical health.

The project has also shown that the impact of recessions on health is not uniform across countries and varies according to the institutions as well as the time period studied. In some countries such as Finland, where social safety nets are well developed, we find little evidence that major economic recessions impact population health.

A major innovation of the project is the study of social policies and programmes which may mitigate the impact of the economy on health. We compiled a novel dataset linking US state mortality, state-level economic conditions, and state unemployment benefit generosity to show that the impact of economic downturns on suicide is offset by the availability of generous state unemployment benefit programs. We have also been able to show that, among working mothers, more generous maternity leave benefits during the birth of a child are associated with better mental health in old age. We have also been able to show that recessions impact health in middle-income countries, and that social programme such as non-contributory pensions, conditional cash transfers and health insurance programmes have the potential to mitigate the impact of recessions on health. Finally, we show that social policies addressing work and family conflict may be important drivers of health particularly for young mothers and their children.

Results from this project offer important insights on the role of the broad economic environment in shaping individual life and employment trajectories, and how these in turn influence healthy ageing. Findings highlight the importance of social policies for protecting individuals from the negative impact of economic adversity over the life-course on health in old age.