The Effect of Layoffs on the Mental Health and Safety of Remaining Workers: A Quasi-Experimental Study of the U.S. Aluminum Industry

Holly Stewart , University of California, Berkeley
Elijahu Ben-Michael, University of California, Berkeley
David H. Rehkopf, Stanford University
Sepideh Modrek, San Francisco State University
Ellen Eisen, University of California, Berkeley
Mark Cullen, Stanford University

Although the consequences of socioeconomic shocks such as layoffs are well-documented, fewer studies focus on their effects on remaining workers. We examined the effect of layoffs on injury and mental healthcare utilization among workers employed at one of 30 U.S. aluminum plants between 2003 and 2013. We defined layoff events at the plant level as a 20% or greater reduction in the number of workers within a quarter. Using difference-in-differences, we compared the probability of the outcome in the layoff quarter to the same quarter one year earlier at plants where layoffs occurred versus plants where no layoffs occurred. We find increased probability of outpatient visits and prescriptions for mental health during layoffs, whereas the probability of injuries is decreased. The increase in mental healthcare utilization may be attributable to psychiatric distress or ex ante moral hazard, whereas the reduction in injuries may reflect reduced reporting of injuries during layoffs.

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 Presented in Session 11. Health & Mortality 2