The effect of unemployment on the mental health of spouses - Evidence from plant closures in Germany
Leibniz Seminar für Arbeitsmarktforschung (BeNA)
Previous studies on the health effects of unemployment neglect spillover effects on spouses. This study estimates the effect of one spouse's unemployment on the mental health of the other spouse. In order to give the estimates a causal interpretation, this study focuses on an exogenous entry into unemployment (plant closure), and combines matching based on entropy balancing and difference-in-difference to make the estimation robust against selection on observables and time-invariant unobservables. Using German Socio-Economic Panel Study data this paper finds that unemployment decreases the mental health for spouses almost as much as for the directly affected individuals. The findings highlight that previous studies underestimate the public health costs of job loss as they do not consider the consequences for spouses.