Long-Term Unemployment Subsidies and Middle-Age Disadvantaged Workers’ Health

EB Working Paper N. 2020/16

48 Pages Posted: 22 Mar 2021

See all articles by Institut Economia de Barcelona (IEB)

Institut Economia de Barcelona (IEB)

affiliation not provided to SSRN

J. Ignacio García Pérez

Fundacion Centro de Estudios Andaluces (CENTRA); Universidad Pablo de Olavide

Judit Vall Castelló

University of Barcelona

Date Written: December 22, 2020

Abstract

We estimate the labour market and health effects of a long-term unemployment (LTU) subsidy targeted to middle aged disadvantaged workers. In order to do so, we exploit a Spanish reform introduced in July 2012 that increased the age eligibility threshold to receive the subsidy from 52 to 55. Using a within-cohort identification strategy, we show that men ineligible for the subsidy were more likely to leave the labour force. In terms of health outcomes, although we do not report impacts on hospitalizations when considering the whole sample, we do find significant results when we separate the analysis by main diagnosis and gender. More specifically, we show a reduction by 12.9% in hospitalizations due to injuries as well as a drop by 2 percentage points in the probability of a mental health diagnosis for men who were eligible for the LTU subsidy. Our results highlight the role of long-term unemployment benefits as a protecting device for the health (both physical and mental) of middle aged, low educated men who are in a disadvantaged position in the labour market.

Keywords: Disadvantaged workers, unemployment subsidies, health effects

JEL Classification: I10, J65

Suggested Citation

(IEB), Institut Economia de Barcelona and García Pérez, José Ignacio and Vall Castelló, Judit, Long-Term Unemployment Subsidies and Middle-Age Disadvantaged Workers’ Health (December 22, 2020). EB Working Paper N. 2020/16, Available at SSRN: https://ssrn.com/abstract=3785914 or http://dx.doi.org/10.2139/ssrn.3785914

Institut Economia de Barcelona (IEB)

affiliation not provided to SSRN

José Ignacio García Pérez

Fundacion Centro de Estudios Andaluces (CENTRA) ( email )

Calle Bailen, 50
41001 Seville
Spain

Universidad Pablo de Olavide

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain

Judit Vall Castelló (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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