Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession

50 Pages Posted: 4 Sep 2015

See all articles by Lidia Farré

Lidia Farré

Spanish Council for Scientific Research (CSIC) - Institute for Economic Analysis; Universidad de Alicante

Francesco Fasani

Queen Mary, University of London

Hannes Felix Mueller

Instituto de Análisis Económic (IAE) Barcelona

Abstract

This article documents a strong connection between unemployment and mental disorders using data from the Spanish Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job loss. Our results suggest that an increase of the unemployment rate by 10 percent due to collapse of the sector raised mental disorders in the affected population by 3 percent. We argue that the large size of this effect responds to the fact that the construction sector was at the centre of the macroeconomic shock. As a result, workers exposed to the negative employment shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, hopelessness and feelings of uselessness.

Keywords: mental health, great recession, unemployment, Spain

JEL Classification: I10, J60, C26

Suggested Citation

Farré, Lidia and Fasani, Francesco and Mueller, Hannes Felix, Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession. IZA Discussion Paper No. 9235, Available at SSRN: https://ssrn.com/abstract=2655276

Lidia Farré (Contact Author)

Spanish Council for Scientific Research (CSIC) - Institute for Economic Analysis ( email )

UAB Campus
E-08193 Bellaterra
Spain

Universidad de Alicante ( email )

Campus de San Vicente
Carretera San Vicente del Raspeig
San Vicente del Raspeig, Alicante 03690
Spain

Francesco Fasani

Queen Mary, University of London ( email )

Hannes Felix Mueller

Instituto de Análisis Económic (IAE) Barcelona ( email )

Barcelona, Bellaterra 08193
Spain

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