The Impact of Clinical Depression on the Labor Market Outcomes of Young Adults

Abstract:     
Using the 1999 to 2004 NHANES micro data files, this paper estimates the economic impact of clinical depression on the labor market outcomes of young adults between the ages of 20 and 39. For all 20 to 39 year olds, women, and low-income individuals, we find that depression is associated with a reduction in employment by lengthening job search and not a departure from the labor force. For minorities, we find that employment loss is associated with labor force departure. Our estimates indicate that depression has little impact on hours worked and job tenure. We also find indirect evidence that the unemployment rate of depressed individuals increased during the 2001 recession and jobless recovery. Future work will utilize state variation in mental health insurance laws to address depression’s endogeneity, incorporate additional data sets and years of data, and include local economic indicators.

Number of Pages in PDF File: 43

Keywords: depression, unemployment, labor force participation

JEL Classification: J15, J21

working papers series