Organisational Change, Health and the Labour Market

This research examines the effects of organisational change on employee health and labour market outcomes. Previous studies looking into organisational change in the private sector indicate that the larger the size and depth of organisational change, the larger the detrimental consequences to the employees. This study contributes to the literature on four main dimensions. First, we extend the analysis of organisational change to a public sector setting. Second, while previous findings remain inconclusive regarding causal effects due to problems of endogeneity, our analysis contributes to research of causal effects of organisational change by exploiting a large scale public sector reform which can be considered as a quasi-experiment. Third, given that the reform was exogenous and implemented simultaneously in a number of Danish municipalities, we also have an objective measure of organisational change. And fourth, we have access to objective measures of health outcomes from register data. The results show that the effects of organisational change on health outcomes are limited and heterogeneous. Change per se does not necessarily lead to worsened employee outcomes. However, the degree of the change seems to matter. The smaller share an old organisation constitutes of the new organisation, the larger the effect is on health outcomes for its employees.