Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/36759 
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers No. 4883
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
A large body of empirical research links mental health and labour market outcomes; however, there are few studies that effectively control for the two-way causality between work and health and the existence of unobserved individual characteristics that might jointly determine health and labour market outcomes. In this study, we estimate the effect of mental health on labour market participation using various models, including instrumental variable models that exploit individual variation observed in panel data. We find robust evidence that a reduction in mental health has a substantial negative impact on the probability of actively participating in the labour market. We calculate that a one standard deviation decrease in mental health decreases the probability of participation by around 17 percentage points. This effect is larger for females and for older individuals. We therefore provide robust evidence that there are substantial costs due to the lost productivity resulting from poor mental health.
Subjects: 
Labour market participation
mental health
measurement error
causality
JEL: 
I10
J21
J22
Document Type: 
Working Paper

Files in This Item:
File
Size
175.05 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.