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The Effect of Depression on Labor Market Outcomes

  • Lizhong Peng
  • Chad D. Meyerhoefer
  • Samuel H. Zuvekas

We estimated the effect of depression on labor market outcomes using data from the 2004-2009 Medical Expenditure Panel Survey. After accounting for the endogeneity of depression through a correlated random effects panel data specification, we found that depression reduces the likelihood of employment. We did not, however, find evidence of a causal relationship between depression and hourly wages or weekly hours worked. Our estimates are substantially smaller than those from previous studies, and imply that depression reduces the probability of employment by 2.6 percentage points. In addition, we examined the effect of depression on work impairment and found that depression increases annual work loss days by about 1.4 days (33 percent), which implies that the annual aggregate productivity loses due to depression-induced absenteeism range from $700 million to 1.4 billion in 2009 USD.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19451.

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Date of creation: Sep 2013
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Handle: RePEc:nbr:nberwo:19451
Note: HE
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  1. Daniel Millimet & Rusty Tchernis & Muna Hussain, 2007. "School Nutrition Programs and the Incidence of Childhood Obesity," Caepr Working Papers 2007-014, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
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  11. Chad D. Meyerhoefer & Samuel H. Zuvekas, 2010. "New estimates of the demand for physical and mental health treatment," Health Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 297-315.
  12. Attila Cseh*, 2008. "The Effects of Depressive Symptoms on Earnings," Southern Economic Journal, Southern Economic Association, vol. 75(2), pages 383-409, October.
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