Job Insecurity, Debt Burdens, and Individual Health

Job insecurity exerts negative effects on self‐reported health. Using the Spanish Survey of Household Finances for 2011–2014, this paper asks whether and to what extent debt burdens enhance these detrimental health effects. To address potential endogeneity problems surrounding this question, the paper adopts Deb and Trivedi’s (Econometrics Journal, 9, 307–331, 2006) econometric approach. The results show that the negative effect of job insecurity on self‐assessed health is exacerbated if the individual is over‐indebted. Moreover, the role of over‐indebtedness differs between types of debt, with non‐mortgage debts causing larger health losses than mortgage debts. Thus, concerns about job insecurity should not be decoupled from concerns about increasing household indebtedness, and policy measures intended to improve individual welfare should consider both phenomena together.