Recessions, Older Workers, and Longevity
A recession in the years preceding retirement results in a short period in which mortality is lower, but then a longer period in which mortality is higher.
In Recessions, Older Workers, and Longevity: How Long Are Recessions Good for Your Health? (NBER Working Paper No. 18361), Courtney Coile, Phillip Levine, and Robin McKnight find that if workers experience an economic downturn in their late fifties, they may face several years of reduced employment before they reach Social Security eligibility at age 62, and may lose health insurance until they are eligible for Medicare. They conclude that this may contribute to higher mortality rates for these seniors.
Indeed, they find that experiencing a recession in the years preceding retirement results in a short period in which mortality is lower, but then a longer period in which mortality is higher. The overall result is lower survival rates for these individuals at older ages. For example, the authors find that a worker who loses his or her job at age 58 as a result of a recession is expected to live as much as three fewer years (19 years instead of 22) than a comparable worker who does not experience job loss. For workers in their late fifties through age 61, any short-term positive health benefits associated with a recession are temporary and ultimately are more than offset by subsequent health deterioration. The authors further find that a recession may present financial barriers to health care because the consequence of recession-related job loss is a reduced rate of health insurance coverage, which could last through the ages of early entitlement to Social Security and Medicare eligibility, respectively.
To explore the longer-term consequences of recessions, Coile, Levine, and McKnight focus this analysis on individuals who are approaching retirement at the time an economic downturn begins. They use Vital Statistics mortality data for the period 1969 to 2008 to generate age-specific survival probabilities for older individuals, and they link these survival probabilities to labor market conditions at earlier ages. They also use data from the 1980-2010 March Current Population Surveys and the 1991-2010 Behavioral Risk Factor Surveillance System surveys to explore potential relationships between the health effect of recessions and job loss.
-Matt NesviskyThe Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.