The health externalities of downsizing

Rudolf Winter-Ebmer; Alexander Ahammer; Dominik Grübl

The health externalities of downsizing

Institute of Economics

Research output: Other contribution

Abstract

We show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.

Original language	English
Number of pages	49
Publication status	Published - Dec 2020

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 2 Zero Hunger
SDG 8 Decent Work and Economic Growth
SDG 9 Industry, Innovation, and Infrastructure
SDG 17 Partnerships for the Goals

Fields of science

303010 Health economics
502 Economics
502002 Labour economics
502009 Corporate finance
502021 Microeconomics
502042 Environmental economics
502047 Economic theory
504014 Gender studies
507016 Regional economy
405002 Agricultural economics
502001 Labour market policy
502003 Foreign trade
502010 Public finance
502012 Industrial management
502013 Industrial economics
502018 Macroeconomics
502020 Market research
502025 Econometrics
502027 Political economy
502039 Structural policy
502046 Economic policy
506004 European integration

JKU Focus areas

Sustainable Development: Responsible Technologies and Management

Cite this

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title = "The health externalities of downsizing",

abstract = "We show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.",

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AU - Ahammer, Alexander

AU - Grübl, Dominik

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N2 - We show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.

AB - We show that downsizing has substantial externalities on the health of workers who remain in the firm. To this end, we study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health externalities due to downsizing imply non-negligible cost for firms, and that wage cuts may have similar effects.

M3 - Other contribution

ER -