The psychological toll of not making it: Import Penetration and Mortality in the US
Bernardo Pereira de Moura
Tesis, Magíster en Economía, IE-PUC, 2018
Abstract: Mortality rates for people in their prime (ages 25 to 54) have been increasing, a trend unseen in recent history and exclusive to the US. Most of this growth in mortality can be accounted by deaths from suicide, drug and alcohol poisonings, as well as alcohol-related liver disease, a set also known as deaths of despair. There is correlational evidence that poor labor market outcomes may be driving this increase in mortality. To move beyond correlation, we use an instrumental variable (IV)/reduced-form strategy: we estimate the impact of import penetration on US mortality rates, as an indirect approach to better understand how labor market outcomes affect mortality. Our instrument, import penetration, measures local labor market exposure to Chinese exports, and it constitutes an exogenous demand shock to local labor markets. We present the following results: growth of import exposure between 1991 and 2016 is associated with rising mortality rates in the US; the effects are strongest for white non-hispanics, and weaker for minorities. Suicide and addiction-related deaths comprise only a tiny fraction of mortality overall (less than 4%) but represent more than half of the impact that import penetration has on mortality for white non-hispanics. Whilst minorities also suffer economically from the labor market shock, their suicide and addiction-related mortality rates are unaffected. We explain these differences across race/ethnicity by exploring the cumulative disadvantage hypothesis wherein people are not driven to suicide and addiction by their struggles in the labor market per se, but rather by the income downward mobility resulting from labor market shocks. Import penetration also has a significant impact on health insurance coverage and opioid prescription rates, further evidence of its effect on mortality.