Receiving unemployment benefits may have positive effects on the health of the unemployed

Research suggests that job loss can cause illness and premature death. This raises the question of whether unemployment benefit programs, which aim to alleviate the financial stress of job loss, can protect the health of the unemployed. To investigate the impact of unemployment benefits on health after job loss, we used data from 1984 to 2009 from the Panel Study of Income Dynamics (PSID). We found that receiving unemployment benefits significantly reduces the probability of reporting poor health in the year after job loss by around 5 percentage points. The health promoting effects of unemployment benefits are robust across multiple model specifications and controls for pre-existing differences between benefit recipients and non-recipients. Our results add to an increasing body of literature that suggests that social policies can have unanticipated health effects.