Does labour protection influence mental-health responses to employment shocks? Evidence on older workers in Europe (Cinzia Di Novi, Paolo Paruolo, Stefano Verzillo)

This paper investigates if and how labour market protection legislation influences mental- health responses to job disruptions of older workers in Europe. It exploits labour market shocks during the start of the COVID 19 pandemic, and it is based on European data from the surveys of Health, Ageing and Retirement in Europe (SHARE), where each country is characterized by a different level of Employment Protection Legislation (EPL). It is found that, controlling for workers’ characteristics and other contextual factors via propensity score matching, mental- health distress following job disruptions depends on the level of EPL, with higher and more significant effects in countries where EPL is more binding, especially among individuals with lower education. These findings suggest considering mitigating measures for European countries with high EPL, especially for older citizens with disadvantaged backgrounds.