UNEMPLOYMENT AND HEALTH - SELECTION EFFECTS

A large number of studies have shown that the unemployed are less heal thy, both physically and psychologically, than the employed. The expla nation may be that unemployment has negative health effects. An altern ative, or additional, explanation is that healthy persons are less lik ely to become unemployed or more likely to find new employment if they become unemployed. Such effects of health on employment status are ge nerally referred to as selection effects. The present paper analyses t o what extent such selection effects are present in the Norwegian labo ur market. Panel data with observations made in 1989 and 1993 are used . The analyses show that people with psychological problems are more l ikely to be laid off, and there is also some evidence that psychologic al or physical health problems may reduce the chances of finding a new job if one has become unemployed. It is of particular interest that t hese selection effects can be documented for a country like Norway, wh ich has strong legislation supporting worker rights and a quite high d egree of unionization.