The Impact of Job Loss on Family Mental Health

Posted: 18 Jun 2007

Date Written: May 2007

Abstract

The objective of this paper is to examine the impact of job loss on family mental well-being.

The negative income shock due to job loss can affect the mental health status of the individual who directly experiences the displacement, as well as the psychological well-being of her/his partner; also, job loss may have a large detrimental effect on life satisfaction, self esteem and on the individual perceived role in the society. All these elements are likely to have repercussions for family members' mental health. The analysis is based on the sample of all married/cohabitating couples from the British Household Panel Survey, with male in paid employment at the first wave. Controls are included for mental-health related sample attrition and mental health dynamics. To investigate these issues I use a dynamic panel random effects probit model. In order to correct for the possible endogeneity of job loss, data from the employment histories is utilised, linking all the job losses with the reasons for terminating the employment spell. I focus on involuntary redundancies and I use two different strategies to deal with possible endogeneity. First of all, I add the information about the industry workforce growth rate and I use redundancies (different from dismissals) in declining industries as an indicator of exogenous job loss. Second, a sensitivity analysis is conducted using instrumental variable estimation, with an interaction between job satisfaction with job security (prior to job loss) and industry as an instrument for involuntary Results to date show evidence that couples in which the husband experiences a job loss are more likely to experience poor mental health and the negative effect is found from both exogenous redundancy and from dismissals. Hence there is evidence of multiple transmission channels through which displacements affect family well-being.

Keywords: Job loss, mental health

JEL Classification: I10,J12

Suggested Citation

Mendolia, Silvia, The Impact of Job Loss on Family Mental Health (May 2007). Available at SSRN: https://ssrn.com/abstract=994600

Silvia Mendolia (Contact Author)

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
0044 1224 272182 (Phone)

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