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Mental Health and Employment: A Bounding Approach Using Panel Data

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  • Mark L Bryan
  • Nigel Rice
  • Jennifer Roberts
  • Cristina Sechel

Abstract

The effect of mental health on employment is a key policy question, but reliable causal estimates are elusive. Exploiting panel data and extending recent techniques using selection on observables to provide information on selection along unobservables, we estimate that transitioning into poor mental health leads to a 1.6% point reduction in the probability of employment; approximately 10% of the raw employment gap. Selection into mental health is almost entirely based on time‐invariant characteristics, rendering fixed effects estimates unbiased in this context, meaning researchers no longer have to rely on the narrow local average treatment effects of most health/work IV studies.

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  • Mark L Bryan & Nigel Rice & Jennifer Roberts & Cristina Sechel, 2022. "Mental Health and Employment: A Bounding Approach Using Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(5), pages 1018-1051, October.
    • Handle: RePEc:bla:obuest:v:84:y:2022:i:5:p:1018-1051
    DOI: 10.1111/obes.12489
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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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