Working Paper: NBER ID: w13626
Authors: Daniel Sullivan; Till von Wachter
Abstract: This paper uses administrative data on quarterly employment and earnings matched to death records to estimate the effects of job displacement on mortality. We find that job displacement leads to a 15-20% increase in death rates during the following 20 years. If such increases were sustained beyond this period, they would imply a loss in life expectancy of about 1.5 years for a worker displaced at age 40. These results are robust to extensive controls for sorting and selection, and are consistent with estimates of the effects of job loss on mortality pooling displaced workers and stayers that are not affected by selective job displacement. To examine the channels through which mass layoffs raise mortality, we exploit the panel nature of our data -- covering over 15 years of earnings -- to analyze the correlation of long-run career outcomes, such as the mean and standard deviation of earnings, with mortality at the individual and group level, something not possible with typical data sets. Our findings suggest that factors correlated with a decrease in mean earnings and a rise in standard deviation of earnings have the potential to explain an important fraction of the effect of a job displacement on mortality.
Keywords: mortality; mass layoffs; career outcomes; job displacement; administrative data
JEL Codes: I1; J63; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job displacement (J63) | increase in death rates (J11) |
| decrease in mean earnings (J31) | increase in death rates (J11) |
| increase in standard deviation of earnings (C46) | increase in death rates (J11) |
| persistent earnings losses (G33) | increase in death rates (J11) |
| increased earnings instability (J31) | increase in death rates (J11) |
| job displacement (J63) | loss of life expectancy (J17) |
| age of worker (J21) | impact of job displacement on mortality (J63) |