The effect of mental health on employment: evidence from Australian panel data

Frijters, Paul, Johnston, David W. and Shields, Michael A. (2014) The effect of mental health on employment: evidence from Australian panel data. Health Economics, 23 9: 1058-1071. doi:10.1002/hec.3083


Author Frijters, Paul
Johnston, David W.
Shields, Michael A.
Title The effect of mental health on employment: evidence from Australian panel data
Journal name Health Economics   Check publisher's open access policy
ISSN 1099-1050
1057-9230
Publication date 2014-09-01
Year available 2014
Sub-type Article (original research)
DOI 10.1002/hec.3083
Volume 23
Issue 9
Start page 1058
End page 1071
Total pages 14
Place of publication Chichester, West Sussex, United Kingdom
Publisher John Wiley & Sons
Language eng
Abstract To what extent does poor mental health affect employment outcomes? Answering this question involves multiple technical difficulties: two-way causality between health and work, unobservable confounding factors and measurement error in survey measures of mental health. We attempt to overcome these difficulties by combining 10 waves of high-quality panel data with an instrumental variable model that allows for individual-level fixed effects. We focus on the extensive margin of employment, and we find evidence that a one-standard-deviation decline in mental health reduces employment by 30 percentage points. Further investigations suggest that this effect is predominantly a supply rather than a demand-side response and is larger for older than young workers.
Keyword Employment
Fixed effects
Instrumental variables
Mental health
Panel data
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
School of Economics Publications
 
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