The Effect of Labor Market Shocks on Health: The Case of the Russian Transition

Abstract During the first years of the transition to the market economy in Russia, many people experienced the whole range of stressful labor market events, including job loss, wage cuts and nonpayments; some people had to change occupations or take on additional work. These events were caused externally by the unprecedented structural shifts in the economy. This natural experiment provides an opportunity to estimate the causal effect of various labor market shocks on individual health and health-related behaviors. Propensity score matching and difference-in-difference estimates using household survey data show that labor market shocks during the early transition had long-term negative effects on individual health. I also find an increased incidence of smoking and alcohol consumption as well as a higher risk of certain types of chronic health problems for the people affected by labor market shocks.