AN INSTRUMENTAL VARIABLE APPROACH TO UNEMPLOYMENT, PSYCHOLOGICAL HEALTH AND SOCIAL NORM EFFECTS
Article first published online: 13 JUN 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Volume 22, Issue 6, pages 643–654, June 2013
How to Cite
Gathergood, J. (2013), AN INSTRUMENTAL VARIABLE APPROACH TO UNEMPLOYMENT, PSYCHOLOGICAL HEALTH AND SOCIAL NORM EFFECTS. Health Econ., 22: 643–654. doi: 10.1002/hec.2831
- Issue published online: 7 MAY 2013
- Article first published online: 13 JUN 2012
- Manuscript Accepted: 2 APR 2012
- Manuscript Revised: 21 NOV 2011
- Manuscript Received: 11 MAR 2011
- psychological health;
- social norm effects
This empirical study presents estimates of the impact of unemployment on psychological health using UK household panel data. The causal impact of unemployment is established using instrumental variable methods. Psychological health is measured using both the General Household Questionnaire measure and also self-reported data on individual occurrences of anxiety-related conditions. We find evidence for positive selection into unemployment on the basis of poor psychological health. Nevertheless, panel instrumental variable estimates suggest a sizeable causal worsening of psychological health arising from unemployment. We also find evidence that the negative impact of unemployment can be largely mitigated by local labour market conditions: those entering unemployment in localities with higher unemployment rates suffer less deterioration in their psychological health. Copyright © 2012 John Wiley & Sons, Ltd.