Macroeconomic Conditions and Health: Inspecting the Transmission Mechanism

Abstract

This paper studies the effects of labor market conditions on individual- level health, investigating the factors that moderate and mediate this relationship. Using a large and representative sample of individuals in Italy between 1993 and 2012, we shed light on the transmission mechanism, focusing on the role played by health behaviors (smoking, alcohol consumption, physical activity, eating habits) and economic stress. We find that, overall, higher local unemployment negatively affects health, with a dynamic response that differs across health conditions. Employment status and educational level play a significant role as moderators of these effects. Eating habits, in addition to economic stress, are found to play a key role in the transmission mechanism, while physical activity acts as a buffer against the adverse health effects of unemployment shocks.

Keywords: economic conditions, unemployment, health behaviors, health outcomes

JEL Classification: I1, I10, I12, I18