We show that downsizing has substantial negative effects on the health of
workers who remain in the firm. We study mass layoff (ML) survivors in Austria,
using workers who survive a ML themselves, but a few years in the future, as a
control group. Based on high-quality administrative data, we find evidence that
downsizing has persistent effects on mental and physical health, and that these
effects can be explained by workers fearing for their own jobs. We also show that
health effects due to downsizing imply non-negligible costs for firms.
Forschungs-