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AN INSTRUMENTAL VARIABLE APPROACH TO UNEMPLOYMENT, PSYCHOLOGICAL HEALTH AND SOCIAL NORM EFFECTS
Author(s) -
Gathergood John
Publication year - 2013
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.2831
Subject(s) - unemployment , instrumental variable , economics , panel data , mental health , demographic economics , anxiety , norm (philosophy) , variable (mathematics) , british household panel survey , psychology , econometrics , economic growth , psychiatry , political science , mathematics , mathematical analysis , law
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.