Unemployment and Mortality: Evidence from the PSID

In this paper, we use the death file from the Panel Study of Income Dynamics to investigate the relationship between county-level unemployment rates and mortality risk. After partialling out important confounding factors including baseline health status as well as state and industry fixed effects, we show that poor local labor market conditions are associated with higher mortality risk for working-aged men. In particular, we show that a one percentage point increase in the unemployment rate increases their mortality hazard by 6%. There is little to no such relationship for people with weaker labor force attachments such as women or the elderly. Our results contribute to a growing body of work that suggests that poor economic conditions pose health risks and illustrate an important contrast with studies based on aggregate data.