The effects of job displacement on health: Evidence from the economic restructuring in urban China

Abstract

In the late 1990s, the Chinese government initiated dramatic reform in its state-sector enterprises, which caused millions of workers to lose their jobs. Using data obtained from the China Health and Nutrition Survey, we employ fixed-effect methods to explore the effects of displacement on the dismissed workers' health status. Our results show that these displaced workers are more likely to report having poor health and suffer from chronic conditions, such as hypertension and stroke. The effect on chronic conditions appears only in the long run. In addition, we find that the displaced workers are less likely to be covered by health insurance, less likely to see a doctor when they are ill, and more likely to engage in unhealthy behavior such as smoking, which may help explain the poor health outcomes of these individuals. Moreover, we show that the health effects are heterogeneous among different groups of individuals.