Lives saved during economic downturns: Evidence from Australia

Abstract

Worldwide, countries have been restricting work and social activities to counter the emerging public health crisis due to the coronavirus pandemic. These measures have caused dramatic increases in unemployment. Some commentators argue that the "draconian measures" will do more harm than good due to the economic contraction, despite a large literature that finds mortality rates decline during recessions. We estimate the relationship between unemployment, a proxy for economic climate, and mortality in Australia, a country with universal health care. Using administrative time-series data on mortality by state, age, sex, and cause of death for 1979-2017, we find no relationship between unemployment and mortality on average. However, we observe beneficial health effects in economic downturns for young men, associated with a reduction in transport accidents. Our estimates imply 431 fewer deaths in 2020 if unemployment rates double as forecast. For the early 1980s, we find a procyclical pattern in infant mortality rates. However, this pattern disappears starting from the mid-1980s, coincident with the 1984 implementation of universal health care. Our results suggest that universal health care may insulate individuals from the health effects of macroeconomic fluctuations.