Health Effects of Labor Market Policies: Evidence from Drug Prescriptions

Please send an email to Nadine Ketel or Paul Muller if you are interested to participate in this seminar (series).

We use individual-level labor market and prescription drug records to study unintended effects of labor market policies on participants' health status. We examine two popular and commonly used interventions that represent different reintegration strategies for unemployed workers: training programs and benet sanctions. To establish a causal relationship we exploit the longitudinal aspect of the prescription records and estimate dynamic difference in differences models comparing treated and non-treated individuals before and after the treatment. Our results show that supportive interventions, such as training programs, reduce drug prescriptions related to cardiovascular and mental health diseases by about 6-7% within a year after the program start. The direct eect of participating, e.g. due to a change of daily routines, seem to be more important than the indirect eect through improved employment prospects. Restrictive interventions, such as benet sanctions, have no long-lasting effects on drug prescriptions, but the notification of an upcoming sanction leads to a shortrun increase in prescriptions for mental health issues, which is possibly induced by higher stress levels. Joint with Robert Mahlstedt, Gerard J. van den Berg, and Johan Vikstrm.

Keywords: Unemployment, Labor market policies, Health Effects
JEL codes: J68, I12, I18, H51