Employment insecurity and employees' health in Denmark

We use register data for Denmark (IDA) merged with the Danish Work Environment Cohort Survey (1995, 2000, and 2005) to estimate the effect of perceived employment insecurity on perceived health for a sample of Danish employees. We consider two health measures from the SF-36 Health Survey Instrument: a vitality scale for general well-being and a mental health scale. We first analyse a summary measure of employment insecurity. Instrumental variables-fixed effects estimates that use firm workforce changes as a source of exogenous variation show that 1 additional dimension of insecurity causes a shift from the median to the 25th percentile in the mental health scale and to the 30th in that of energy/vitality. It also increases by about 6 percentage points the probability to develop severe mental health problems. Looking at single insecurity dimensions by naïve fixed effects, uncertainty associated with the current job is important for mental health. Employability has a sizeable relationship with health and is the only insecurity dimension that matters for the energy and vitality scale. Danish employees who fear involuntary firm internal mobility experience worse mental health.