Long-term Health Consequences of Adverse Labor Market Conditions at Time of Leaving Education: Evidence from West German Panel Data

Abstract

Using longitudinal survey data from the Socio-Economic Panel Study (N = 3,003 respondents with 22,165 individual-year observations) and exploiting temporal and regional variation in state-level unemployment rates in West Germany, we explore differences in trajectories of individuals’ self-rated health over a period of up to 23 years after leaving education under different regional labor market conditions. We find evidence for immediate positive effects of contextual unemployment when leaving education on individuals’ health. We find no evidence for generally accelerated or decelerated health deterioration when leaving education in high-unemployment contexts. We find, however, that individual unemployment experience when leaving education is associated with worse health and with more accelerated health deterioration in high-unemployment contexts. The cumulative experience of unemployment after leaving education does not mediate the influence of early labor market experiences for long-term health outcomes. In addition, our analyses indicate no gender differences in these results.