Labor Market Deregulation and Deaths of Despair

Employment protection legislation (EPL) deregulation has expanded labor market flexibility across advanced economies, with underexplored consequences for population health. This paper asks whether such deregulation contributes to deaths of despair (drug overdoses, alcohol-related disease, and suicide), a mortality pattern first documented in the United States. Using OECD employment protection indicators and WHO mortality data for 26 economies from 1998–2019, I apply the local projection method to trace the dynamic mortality response to major EPL reforms. Drug use disorder and suicide mortality rise significantly within five years of deregulation, with no corresponding rise in alcohol-related mortality. This response is systematically moderated by institutional context: health-system effectiveness consistently attenuates it; income support protects against suicide and violence but, unexpectedly, amplifies the alcohol-mortality response; and poverty dampens the drug-mortality response, consistent with an affordability channel in which binding budget constraints limit the substance use that economic insecurity would otherwise drive. These findings indicate that labor market deregulation carries public-health costs, and that social safety nets and health-system capacity are important complements to flexibility-enhancing reforms.

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Recommended citation: Chung, Nara. "Labor Market Deregulation and Deaths of Despair." Job Market Paper, Colorado State University.
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