The softer they fall: a natural experiment examining the health effects of job loss before and after Fornero's unemployment benefit reforms in Italy

Background: Job loss is a well-established social determinant of health. Recent research has taken an `institutional turn', asking whether unemployment support could buffer the health consequences of job loss. Here, we exploit a quasi-natural experiment based on the Fornero reforms in Italy, which increased wage replacement rates from 60% to 75% on 1 January 2013. Methods: We employed difference-in-difference models using longitudinal data covering 202 incidents of job loss from the EU-Survey on Income and Living Conditions to quantify the impact of job loss on changes in self-reported health prior to and after the Fornero reforms (2011-14). Results: Job loss preFornero was associated with health declines -0.342 [95% confidence interval (CI): -0.588 to -0.096] but did not significantly influence health post-Fornero 0.031 (95% CI: -0.101 to 0.164). The difference-in-difference estimate was 0.373 (95% CI: 0.107-0.639), or a -0.51 standard deviation in self-reported health, consistent with the buffering hypothesis. To put the magnitude of this estimate in perspective, the incidence of a chronic illness, such as diabetes, results in a similar magnitude decline in self-reported health. Conclusions: Our analysis contributes to a growing body of evidence that the impact of job loss on health depends critically on the strength of social protection systems and, in some cases, could be eliminated completely.

Automated summary

The study demonstrates that the impact of job loss on health can be mitigated by social protection systems, and in some cases, even completely eliminated.