Sickly Insecure? : a study of worker responses to reduced job security using the financial shock that hit the norwegian petroleum industry
Abstract
A large body of literature has sought to examine how job loss a↵ects those who
have been displaced following an economic downturn. However, far less e↵ort has
been dedicated to investigate the fear-of-unemployment e↵ect which may arise. This
thesis contributes to existing literature by investigating how employees respond to
reduced job security. Research on the matter tends to be inconclusive in regards to
establishing a clear link between job insecurity and health. We exploit the sudden
and substantial drop in oil prices that hit the Norwegian petroleum industry in the
autumn of 2014, allowing us to identify the e↵ect of reduced job security on sickness
absence. In order to address this issue, we take usage of data retrieved from the
Norwegian Labour Force Survey. Existing literature suggests that exposure to job
insecurity could lead to opposing e↵ects when it comes to health. For instance, it
is argued that a tougher labour market represents a health hazard, whereas some
believe that job insecurity works as a disciplinary device. We find no evidence
suggesting that job insecurity has a causal e↵ect on sickness absence. This result is
consistent when subject to a number of heterogeneity tests and is robust to several
specification checks. Nonetheless, there may be rational explanations as to why
we obtain a null e↵ect, such as the two opposing, non-mutually exclusive e↵ects
cancelling each other out.