Corporate Financial Frictions and Employee Mental Health

Abstract

This paper argues that corporate financial frictions can have an adverse effect on employee mental health, an important determinant of employee productivity. To identify the causal effects of financial frictions, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch. Using administrative microdata, we find that antidepressant use grows significantly more among employees of firms in higher need of debt refinancing. Much of this effect occurs at employees keeping their jobs, pointing to decreased perceptions of job security as a transmission channel.

Note:
Funding Information: The research for this publication was partly funded by the Open Data Infrastructure for Social Science and Economic Innovations (ODISSEI) in the Netherlands (www.odissei-data.nl).

Conflict of Interests: I hereby declare, also on behalf of my co-author, that there are not conflicts of interest, neither personal nor financial, that could affect the results of this paper.

Keywords: financial crisis, credit supply, mental health, job insecurity, credit supply, job loss, depression, anti-depressants

JEL Classification: G01, G21, I12