Why did 7M people die prematurely in Eastern Europe during the transition in the 90s? In our paper in the Cambridge Journal of Economics, we present new evidence for the role of deindustrialization.
First of all, the increase in mortality was centered on middle-aged men between 30 and 59. The elderly, not the young, or infants who are sensitive to that quality of care did not experience a significant increase. Thus, healthcare system changes cannot explain the excess deaths. Second, it's also not simply about an increase in absolute deprivation or deep poverty. Poverty-related diseases such as TB alone cannot explain the increased rates of suicides, mental disorders, infarctions, or alcohol-related deaths. The best-fitting direct cause is stress.
But how is stress related to economic change? To put deindustrialization in HU and RUS into context, both countries lost more than 40% of industrial employment in less than 10 years, which is on par with deindustrialization in the US/UK that unfolded over 2-3 decades. Extending on my previous work, we develop a theory identifying deindustrialization as a process of social disintegration rooted in the lived experience of shock therapy. This is also relevant to the American deaths of despair debate.
We test this theory relying on a novel multilevel dataset, fitting survival, and panel models covering 52 towns and 42,800 people in 1989–95 in Hungary and 514 towns in Russia in 1991–99. We tackle selection bias by conducting a placebo test using data from the 80s. We show that deindustrialization was directly associated with male mortality and indirectly mediated by hazardous drinking.
Some economists argued that this is because a) workers had bad drinking habits, b) low alcohol prices during the transition in the 1990s activated these habits. However, we show that the association is not a spurious result of a legacy of dysfunctional working-class culture aggravated by low alcohol prices during the early years of the transition. The Russian results clearly contradict the dysfunctional culture/populist pricing theory.
Our results also indicate that social and economic policies have offset Hungary’s more immense industrial employment loss. Policies addressing the underlying causes of stress and despair are vital to saving lives during painful economic transformations.
The only theory that consistently fits the data is a theory that centers on the lived experience of stress and despair rooted in upstream economic shocks. The bigger the shock, the bigger the stress, and the more people die. The better the social safety net, the fewer people die.
Cite as: Scheiring, Gábor, Azarova, Aytalina, Irdam, Darja, Doniec, Katarzyna J., McKee, Martin, Stuckler, David, King, Lawrence. 2023. “Deindustrialization and the Postsocialist Mortality Crisis.” Cambridge Journal of Economics, Advance access (Published on Mar 20, 2023).
Available here.