Self-Employment and Mental Health
32 Pages Posted: 4 May 2013 Last revised: 11 Sep 2014
Date Written: September 2014
This paper analyzes the role of mental health in self-employment decisions. Using panel data, we find evidence of a causal relationship between mental health problems and self-employment. The relationship depends on the type of self-employment and severity of mental health issues. For men, having moderate psychological distress decreases the probability of being self-employed in an incorporated business between 1 and 3 percent and increases the probability of pursuing self-employment in an unincorporated business between 1 and 3 percent. For women, having moderate psychological distress increases the probability of pursuing self-employment in an unincorporated business between 1 and 2 percent. Further, our results suggest that individual difficulty in the wage-and-salary employment market is the likely mechanism for this connection between mental health and self-employment.
Keywords: Entrepreneurship, self-employment, occupational choice, mental health, depression
JEL Classification: J24, J23
Suggested Citation: Suggested Citation