The Lasting Health Impact of Leaving School in a Bad Economy: Britons in the 1970s Recession.

Summary This paper investigates whether leaving school in a bad economy deteriorates health in the long run. It focuses on low-educated individuals in England and Wales – specifically, individuals who left full-time education in their last year of compulsory schooling – who entered the labour market immediately after the 1973 oil crisis. Unemployment rates sharply increased in the wake of this crisis, such that between 1974 and 1976, each school cohort faced worse economic conditions at labour-market entry than did the previous cohort. Our identification strategy relies on the comparison of very similar pupils – born in the same year and having a similar quantity of education – whose school-leaving behaviour in different economic conditions was exogenously implied by compulsory schooling laws. We provide evidence that, unlike school-leavers who did postpone their entry into the labour market during the recessions of the 1980s and 1990s, pupils’ decisions to leave school at compulsory age immediately after the 1973 oil crisis were not endogenous to the contemporaneous economic conditions at labour-market entry. We use a repeated cross section of individuals over the period 1983-2001 from the General Household Survey (GHS) and adopt a lifecourse perspective, from 7 to 26 years after school-leaving. Our results show that poor economic conditions at labourmarket entry are particularly damaging to women’s health. Women who left school in a bad economy are more likely to report poorer health and to consult a general practitioner over the whole period under study (1983-2001). Additional evidence suggests that they are also more likely to suffer from a longstanding illness/disability over the whole period. For men, the health impact of poor economic conditions at labour-market entry is less obvious and not robust to all specifications.