Business Cycles and Mortality Rates - Aggregate Data for the EU-15 Countries 1990-2012

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: The relationship between business cycles and mortality has been a highly debated subject in the field of economics. The majority of previous studies, using the unemployment rate as the main proxy for macroeconomic conditions, have found ambiguous effects largely depending on how the effect is estimated. This thesis follows the methodology used by Ruhm (2000), but instead applies aggregate data for a sample of European countries; namely the EU-15 countries. Our sample period stretches from 1990 to 2012, extending upon previous research by looking at the associated relationship in more recent times. Using fixed-effects estimations with the unemployment rate as the main proxy for macroeconomic conditions, we investigate the effect of joblessness on total mortality rates, age-specific mortality, sex-specific death rates as well as cause-specific mortality rates. Our findings demonstrate evidence of a significant procyclical relationship between unemployment and mortality, implying that aggregate average health improves as the economy deteriorates. The procyclical association is found to be significant for age groups 15-44 and 60-74, and the male sub-sample seemed to benefit more from increased unemployment than female counterparts. The thesis also contributed to the existing literature by showing that alternative business cycles, such as GDP growth, follow a similar pattern as unemployment rates.

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