Health Effects of Unemployment in Europe During the Great Recession: The Impact of Unemployment Generosity

Social and economic security could be particularly important for health among the unemployed. Nevertheless, knowledge is still lacking as to whether and how different policy contexts affect health when people move into unemployment. This article investigates whether and to what degree the unemployment generosity explains why individual health effects of unemployment vary across Europe. The 2008-2011 longitudinal panel of the European Union statistics on income and living conditions (EU-SILC) and fixed-effects models are used to estimate the individual effects of unemployment on self-rated health (SRH). Social spending on unemployment is used as a proxy for unemployment generosity. The results show that unemployment generosity is associated with reduced negative effects of unemployment on SRH. For every increase in adjusted purchasing power standard spending, the negative effect of unemployment on SRH is reduced by 0.003 (SE = 0.001) and the change in SRH is improved by 0.002 (SE = 0.001) for each year following the transition, after controlling for time-variant confounders at the individual level and unemployment rate at the macro level. The association between spending on unemployment and cross-national differences in individual health changes that occur as people enter unemployment provides a robust indication of the mitigating health effects of unemployment generosity.