The effect of adult psychological therapies on employment and earnings: evidence from England

Background People suffering from common mental disorders (CMDs), such as depression and anxiety, are more likely to be inactive in the labor market. Psychological therapies are highly effective at treating CMDs, but less is known about their impact on long-term labor market outcomes. Methods Using national treatment program data in England, NHS Talking Therapies (NHSTT), with unique linkage to administration data on employment and census records, we estimated the effects of NHSTT on employment and earnings. We used an event study approach using individual fixed effects to capture time-invariant confounders and natural recovery. Results Overall, completing treatment led to a maximum average increase of £17 in monthly earnings (year 2) and a likelihood of paid employment by 1.5 percentage points (year 7). Those ‘Not working, seeking work’ saw a maximum average increase in pay of £63 per month (year 7) and a likelihood of paid employment by 3.1 percentage points (year 4). Patients in the younger age groups (25–34 years) saw the largest effect on the likelihood of paid employment by 2.3 percentage points (year 7), followed by those aged 35–44 years with 2.0 percentage points (year 5). Conclusions Completion of psychological treatment for CMDs through the national NHSTT program leads to sustained increases in both employment and earnings up to 7 years after the start of treatment. Our findings demonstrate the economic benefits of treating CMDs and how investing in mental health can impact labor market participation.