The Influence of the Business Cycle on Mortality

We analyze the impact of short-run economic fluctuations on age-specific mortality usingBayesian time series econometrics and contribute to the debate on the procyclicality ofmortality. For the first time, we examine the differing consequences of economic changesfor all individual age classes. We employ a recently developed model to set up structuralvector autoregressions of a latent mortality variable and of unemployment andGDP growth as main business cycle indicators. We find that young adults noticeablydiffer from the rest of the population. They exhibit increased mortality in a recession,whereas most of the other age classes between childhood and old age react with lowermortality to increased unemployment or decreased GDP growth. In order to avoid thatopposed effects may cancel each other, our findings suggest to differentiate closely betweenparticular age classes, especially in the age range of young adults. The results forthe United States in the period 1956-2004 are confirmed by an international comparisonwith France and Japan. Long-term changes in the relationship between macroeconomicconditions and mortality are investigated with data since 1933.