Entering labor market in recession increases mortality: study

For millions of young people who came of age amid the financial crisis, starting on a career path during a deep recession can take years off their life, in addition to affecting net worth and long-term family outcomes including marriage and cohabitation with children, a study of Northwestern University (NU) suggests.

The study makes use of several large cross-sectional data sources, and a novel approach to estimate midlife effects of entering the labor market in a recession on mortality by cause and various measures of socioeconomic status.

To analyze effects in middle age, the researchers focused on cohorts entering the labor market in different U.S. states before, during, and after the 1982 recession. They used Vital Statistics data from 1979 to 2016 and population estimates from the Census and the American Communities Survey (ACS) to construct mortality rates, which are regressed on the state-level unemployment rate that a cohort faced at the time of graduation. Information on socioeconomic outcomes, including earnings, labor supply, marital status, divorce, and cohabitation was derived from the Decennial Census (Census), the ACS, and the Current Population Survey (CPS).

The researchers found that young people entering the labor market during the deep recession of the early 1980s suffer increased mortality as early as their 30s, mortality rates which become more pronounced through age 50.

The tendency toward an earlier demise for these unlucky job hunters is driven in part by diseases, including heart disease, lung cancer and so-called "diseases of despair" such as liver disease and drug overdoses.

"Overall, these findings raise concerns that entering the labor market in a recession may have larger consequences than current estimates on earnings suggest," said Hannes Schwandt, an assistant professor in the School of Education and Social Policy and an economist with the Institute for Policy Research (IPR) at NU. "Yet, so far these broader and longer-term effects have not been the focus of the literature on recession entrants."

The study was detailed in a working paper published Tuesday in the National Bureau of Economic Research, and is yet to be peer-reviewed.