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.