During the Great Recession, the US experienced the simultaneous collapse of the labor, housing, and stock markets. These shocks caused significant financial distress to many households, reaching beyond those losing their job or facing declines in earnings and wealth, and were likely to have significant impacts on individual’s health. The link between economic downturns and health may result from the stress associated with losing the job/wealth, which can depress the immune system, affect the blood pressure and the cardiovascular system, or cause anxiety and depression. Health may also be affected through changes in health behaviors due to changes in prices/incomes and the opportunity cost of time.

While the literature has documented a link between recessions and health, the evidence is still mixed. Ruhm’s (2000) pioneer work predicted that health improves when the economy temporarily deteriorates. He found that rises in the state unemployment rate were associated with declines in the state mortality rate and the stronger effects were for men of working age who are more attached to the labor market. Dehejia and Lleras-Muney (2004) also identified a positive relationship between infant health and economic downturns. This research claims that these patterns result from changes in individual’s own behavior. In particular, during recessions people tend to smoke/drink less, eat healthier, practice more exercise, and lose weight (Ruhm & Black, 2002; Ruhm, 2005).

Other studies linking individual job loss to individual’s own mortality have shown that job loss increases the chances of dying (Sullivan & Watcher, 2007; Eliason & Storrie, 2009; Coile et al., 2012); the risk of hospitalization , traffic accidents, and self-harm (Eliason & Storrie, 2009); circulatory disease, suicide, and mental illness (Browning & Heinesen, 2012). Moreover, Miller et al., (2012) showed that own-group employment rates are not systematically related to own-group mortality and that changes in individuals’ own behavior contribute little to pro-cyclical mortality. In sum, the relationship between recessions and health provides mixed evidence and the mechanism seems to be other than changes in own-group health behavior.

This paper provides new evidence on the link between recessions and health focusing on the Great Recession. We employ data from the Fragile Families and Child Wellbeing Study (FF), a longitudinal survey of 5,000 vulnerable families that provides rich measures of physical/mental health and substance use, and we model the recession using city-level unemployment rate. Unlike previous literature employing cross-sectional data, this study moves forward by exploiting a panel data, allowing us to control for time-invariant individual/family characteristics correlated with both losing a job and having poor health. This study also contributes to the literature by focusing on women with children since most existing evidence is on men. Our findings suggest declines in women’s physical health, rises in substance use, and heterogeneous effects across demographic/socioeconomic groups. As a robustness check, we replicated our empirical strategy using another nationally representative health survey (Behavioral and Risk Factor Surveillance System), and we found similar but weaker impacts, suggesting that FF is an ideal survey to examine this relationship on a disadvantaged population.