Better health is not often the first consequence of unemployment benefits that comes to mind. New research suggests it shouldn’t be the last, though. In a recent study, Jonathan Cylus and Mauricio Avendano find that those out of work who received unemployment benefits were healthier than comparable unemployed people who did not. Good health is a fundamental policy goal everywhere, so, like any policy area, the health dimension of unemployment benefits deserves some attention.
Cylus and Avendano sought to build on growing evidence that job loss increases the probability of illness and premature death. For them, given that income is an important determinant of health, the question was therefore whether the temporary income replacement from unemployment benefits could compensate for some of the negative effects of losing a job.
Using data from the Panel Study of Income Dynamics (PSID), they compare the risk of reporting poor health one year after job loss between people receiving and people not receiving unemployment benefits. They find that those receiving benefits were less likely to report poor health by about 5 percentage points. The positive health effects of unemployment benefits remained significant after controlling for pre-existing differences between unemployment benefit recipients and non-recipients.
According to the authors, these results are relevant for policymakers. The authors argue that the positive effects of unemployment benefits on health might be especially important for the most vulnerable workers, who in many instances do not qualify to receive benefits due to low earnings or poor work history. This research provides just one example of how social policies unrelated to health can have important unintended health effects, and reinforces the notion that policymakers should consider potential health impacts when designing and reforming social programmes.