Corporate Financial Frictions and Employee Mental Health
CentER Discussion Paper Nr. 2021-003
53 Pages Posted: 15 Mar 2021 Last revised: 17 Aug 2021
Date Written: August 17, 2021
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.
Keywords: financial crisis, credit supply, mental health, job insecurity, credit supply, job loss, depression, anti-depressants
JEL Classification: G01, G21, I12
Suggested Citation: Suggested Citation