The Effects of the Financial Crisis and the Business Cycle on the Health of the European Population.

This research examines whether the business cycle and the financial crisis of 2008 have had an effect on the health of European residents aged 50 and above. Individual-level data have been used to analyze the effects of the unemployment rate on both mental and physical health. Furthermore, the question has been examined whether individuals’ self-perceived health differs with unemployment rate and if certain lifestyle variables, such as tobacco consumption, alcohol consumption and BMI level are related to it. The mental health state is reflected by the eurod scale and the proxy for physical health is the number of chronic diseases. Multiple regression analyses such as logit, probit, OLS, random- and fixed effects regression models are applied and combined to find sustained conclusions. Crisis years (2008-2012) have been separated from non-crisis years to isolate and study the crisis in more detail. The results of this study indicate a negative relation between unemployment rate and mental health. People encounter higher levels on the eurod scale and are more depressed at times of a high unemployment rate. For physical health, there is a more ambiguous relation, but overall the relation is also negative, indicating worse physical health states when unemployment rates are high. The self-perceived health analysis confirms these outcomes. It states that economic downturn is associated with worse self-perceived health of individuals. Besides, when unemployment rates are high, people reduce tobacco and excessive alcohol consumption, but BMI levels will increase.