The Health Effects of Downsizing Survival

Abstract

We show that downsizing has substantial negative effects on the health of workers who remain in the firm. We study mass layoff (ML) survivors in Austria, using workers who survive a ML themselves, but a few years in the future, as a control group. Based on high-quality administrative data, we find evidence that downsizing has persistent effects on mental and physical health, and that these effects can be explained by workers fearing for their own jobs. We also show that health effects due to downsizing imply non-negligible costs for firms.