Does job insecurity deteriorate health? A causal approach for Europe

This paper estimates the causal e ect of perceived job insecurity - i.e. the fear of involuntary job loss - on health in a sample of 22 European countries. We rely on an original instrumental variable approach based on the idea that workers perceive greater job security in countries where employment is strongly protected by the law, and relatively more so if employed in industries where employment protection legislation is more binding, i.e. in industries with a higher natural rate of dismissals. Using cross-country data from the 2010 European Working Conditions Survey, we show that when the potential endogeneity of job insecurity is not accounted for, the latter appears to deteriorate almost all health outcomes. After controlling for endogeneity, the health-damaging e ect of job insecurity is con rmed for a subgroup of health outcomes, namely self-rated health, being sick in the past 12 months, su ering from skin problems, headaches or eyestrain and stomach ache. As for other health variables, the impact of job insecurity appears to be insigni cant at conventional levels.