The Global Financial Crisis and Employee Mental Health

Abstract

We find that the Global Financial Crisis (2007-2009) had an adverse effect on employee mental health. To identify the causal effects of the credit shock, we exploit the plausibly exogenous variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to tightening bank lending standards. Using administrative data from the Netherlands, we demonstrate that antidepressant use grew significantly more in the 2008-2012 period among employees of firms in need of high debt refinancing. A higher probability of job separation in these firms suggests lower job security as a transmission channel.

Keywords: Financial crisis, credit supply, mental health, job insecurity, human capital, work conditions, labor relations, financial distress, bankruptcy

JEL Classification: G01, G21, I12