Available online 24 September 2022, 102689
AbstractWe study the effect of unemployment on cognitive abilities among individuals aged between 50 and 65 in Europe. To this end, we exploit plant closures and use flexible event-study estimations together with an experimentally elicited measure of fluid intelligence, namely word recall. We find that, within a time period of around eight years after the event of unemployment, cognitive abilities only deteriorate marginally – the effects are insignificant both in statistical and economic terms. We do, however, find significant effects of late-career unemployment on the likelihood to leave the labor force, and short-term effects on mental health problems such as depression and sleep problems.
JEL classificationJ14
J24
C21
I1
KeywordsCognitive abilities
Mental health
Unemployment
Event studies
Plant closures
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