The Impact of Job Insecurity on Health Behaviors : Evidence From the Chinese State-Owned Enterprise Reform

China's large-scale reform of its State-Owned Enterprise (SOE) in the late 1990s provides a natural experiment for measuring the impact of job insecurity on health behaviors. Total employment in the SOE sector declined from 113 million in 1995 to 67 million in 2001, which is about 40 percent of total SOE employment in 1995. Prior to the SOE reform, workers in the SOE sector enjoyed similar job security and benefits as government employees. However, the massive layoffs affected only SOE workers, not government workers. The changes in the perceived job insecurity among SOE workers compared to government employees provide an opportunity to examine the consequences of job insecurity. Using an event study and difference-in-differences approach, this paper finds that an increase in the level of perceived job insecurity is associated with an increase in the probability of smoking, the number of cigarettes smoked per day, and excessive alcohol consumption during the reform period. However, no significant effects are observed after the reform when the unemployment risk decreases. In addition, individuals with low educational attainment are more responsive to job insecurity since they are more vulnerable during the reform