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Receiving Unemployment Benefits May Have Positive Effects On The Health of The Unemployed
Receiving Unemployment Benefits May Have Positive Effects On The Health of The Unemployed
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A
n increasing amount of evidence state operates its own unemployment program
suggests that job loss can lead to but must follow certain general rules established
increased probability of illness by the federal government that relate to coverage
and premature death.1–7 Unemploy- and eligibility. Most research on this program
ment benefit programs, which are has focused on its impacts on earnings, con-
intended to alleviate the financial stress of job sumption, and unemployment duration.12–14 Few
loss, could have unintended positive effects on studies have examined the potential health con-
health. If the detrimental health effects of unem- sequences of receiving unemployment benefits.
ployment are in part due to income loss and Identifying the effect of unemployment bene-
financial insecurity, unemployment benefits fits on health is challenging for a number of
may be a mechanism to prevent or reduce some reasons. First, people in poor health are more
of the negative health effects of job loss. Al- likely than healthier workers to experience an
though unemployment benefit programs are unemployment spell.15,16 Second, because there
not explicitly designed to improve health, a num- are strict eligibility requirements to qualify for
ber of recent studies have demonstrated that benefits, recipients of the benefits are likely to
social policies not motivated by health con- differ from unemployed nonrecipients in a num-
cerns—such as the Earned Income Tax Credit, ber of key characteristics associated with health,
welfare reform, and the Supplemental Nutrition such as income and education.17,18
Assistance Program (SNAP, formerly known as While some studies have suggested that unem-
food stamps)—have both positive and negative ployment benefits may ameliorate some of the
consequences for health.8–11 negative health effects of job loss,19–21 they did
The US Federal-State Unemployment Insur- not fully account for preexisting differences be-
ance Program provides temporary wage replace- tween benefit recipients and nonrecipients. Re-
ment for eligible workers who become unem- cipients are often a priori in comparatively better
ployed through no fault of their own. Each health than their nonrecipient counterparts, a
factor that is hard to control for in an analysis. receive unemployment benefits: They must meet
In this study we used twenty survey waves of several monetary and nonmonetary eligibility
the Panel Study of Income Dynamics for the pe- criteria.27 People who have lost their jobs must
riod 1984–2009 to investigate the impact of re- also file claims with state unemployment benefit
ceiving unemployment benefits on the probabil- agencies to receive benefits. Because of these
ity of reporting poor health after job loss. We various steps, not all eligible unemployed people
tested this hypothesis under various model spec- actually claim benefits. In fact, unemployment
ifications that attempted to adjust for the bias benefit programs in the United States have his-
introduced by preexisting differences between torically had low take-up rates, with 34.8 percent
benefit recipients and nonrecipients.While none of the unemployed applying for benefits in 2005
Exhibit 1
Selected characteristics of heads of household, ages 18–65, who experienced an unemployment spell in 1984–2009, by
whether or not they received unemployment benefits
Person received
unemployment Person did not receive All unemployment
benefitsa unemployment benefitsb spells
Characteristic Mean SD Mean SD Mean SD
Male 69.0% 0.5 56.2% 0.5 58.8% 0.5
Age (years) 40.4 11.2 39.5 13.2 39.7 12.8
Marital status
Married 44.1% 0.5 31.4% 0.5 34.0% 0.5
Single 27.6 0.4 38.4 0.5 36.2 0.5
Widowed 3.4 0.2 5.1 0.2 4.8 0.2
Divorced 17.6 0.4 16.8 0.4 17.0 0.4
Separated 7.3 0.3 8.2 0.3 8.0 0.3
Race
White 51.6% 0.5 39.4% 0.5 41.9% 0.5
Black 41.1 0.5 56.2 0.5 53.1 0.5
Other 6.9 0.3 3.7 0.2 4.3 0.2
Education
High school or less 72.8% 0.4 76.9% 0.4 76.1% 0.4
College 26.3 0.4 21.5 0.4 22.5 0.4
Postgraduate 0.8 0.1 1.6 0.1 1.4 0.1
Household size 2.9 1.6 2.7 1.7 2.8 1.7
Household income in year before
unemployment spell $38,149 $31,121 $30,133 $43,496 $31,783 $41,377
Working-age state unemployment
rate in year of unemployment spell 5.1% 1.6 4.7% 1.6 4.8% 1.6
SOURCE Authors’ analysis of data for 1984–2009 from the sample of unemployment spells in the Panel Study of Income Dynamics and
from the Current Population Survey. NOTES All income amounts are in 1999 dollars. SD is standard deviation. a20.6% of the
unemployment spell sample. b79.4% of the unemployment spell sample.
Exhibit 3
SOURCE Authors’ analysis of data for 1984–2009 from the sample of unemployment spells in the Panel Study of Income Dynamics and
from the Current Population Survey. NOTES The models included marital status, race, education, age, sex, number in household, and
logged real household income; state unemployment rates; and state and year fixed effects. The matched sample is explained in the text,
along with details about the linear probability model. SE is robust standard error. *p < 0:10 ***p < 0:01
Discussion
Estimating the health effects of receiving unem-
ployment benefits is challenging because benefit
recipients are often a priori better off than non-
recipients. Inferring causal effects by comparing
the health of recipients to that of nonrecipients
requires great care. In this study we used a variety
of modeling strategies to examine the impact of
receiving unemployment benefits on the health
of the unemployed. Although we still cannot con-
firm that there is a causal link between receiving
benefits and health, our estimates consistently
indicated that, compared to unemployed people
who did not receive benefits during their unem-
ployment spell, those who did receive benefits
were at lower risk of reporting poor health in the
year following job loss.
Our objective was to examine whether receiv-
ing unemployment benefits might influence the
health of the unemployed. Yet the preexisting
differences between benefit recipients and non- SOURCE Authors’ analysis of data for 1984–2009 from the sam-
recipients in health, wealth, and education are ple of unemployment spells in the Panel Study of Income Dynam-
ics and from the Current Population Survey. NOTES The full sam-
policy relevant, as they indicate significant in- ple (all unemployment spells) and propensity score matched
equalities in access to benefits. Unemployment sample are explained in the text, along with details of the linear
benefits help maintain recipients’ consumption probability model and two-stage least squares model. Error bars
indicate 95 percent confidence intervals. The models included
levels and provide an opportunity to search for
marital status, race, education, age, sex, number in household,
new employment.12,37 Therefore, the observed so- and logged real household income; state unemployment rates;
cioeconomic differences between recipients and and state and year fixed effects.
This work was primarily supported by on Aging (Grant Nos. R01AG037398 and a seed grant from the Robert Wood
the European Research Council (Grant R01AG040248) and the McArthur Johnson Foundation.
No. 263684). Mauricio Avendano was Foundation Research Network on Aging.
also supported by the National Institute Part of this work was also supported by
NOTES
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