Health in Times of Crisis: Individual-Level Evidence of the Thomas Effect in Europe during the Great Recession

Gianni Carboni , University of Sassari
Giovanni Busetta, University of Messina
Marcantonio Caltabiano, UNiversity of Messina
Maria Gabriella Campolo, University of Messina
Andrea Manca, UNiversity of Sassari
Martina Meloni, University of Sassari
Marco Morrone, University of Sassari
Gabriele Ruiu, Università degli Studi di Sassari
Giambattista Salinari, University of Sassari
Alessandra Trimarchi, University of Messina
Lucia Ventura, University of Sassari

This study revisits the so-called Thomas Effect—or healthy recession paradox—which posits a pro-cyclical relationship between mortality and economic cycle, suggesting that mortality (and possibly morbidity) declines during recessions. While most evidence has been derived from aggregate data, we assess whether the phenomenon also holds at the individual level, focusing on the Great Recession in Europe. We combine longitudinal microdata from the Survey of Health, Ageing and Retirement in Europe (SHARE) with local unemployment data from Eurostat. The intensity of exposure to the economic downturn is measured as the change in local unemployment between 2007 and 2010, and individuals are classified into tertiles representing no, moderate, and severe crisis exposure. Our analytical sample includes 41,909 individuals and 121,741 observations distributed across 104 European NUTS regions (73 NUTS2 and 30 NUTS1). Using difference-in-differences technique with NUTS and year fixed effects, we estimate the causal effect of the Great Recession on self-reported health, measured by the number of chronic diseases (multimorbidity). Results reveal a negative (beneficial) and statistically significant effect: individuals in more affected regions experienced greater post-crisis reductions in multimorbidity. Event-study evidence supports the parallel-trends assumption, and extensive robustness checks confirm the validity of our findings. Overall, the results provide strong empirical support for the Thomas Effect at the individual level. At least in Europe during the Great Recession, economic contraction appears to have paradoxically improved health outcomes, shedding new light on the complex links between macroeconomic shocks and individual well-being.

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 Presented in Session 122. Health Policy, Health Systems and Population-level Interventions