Implications of Mental Health on Labor Market Outcomes: Evidence from Fixed Effects Models

Undergraduate Honors Thesis

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Citeable URL: https://scholar.colorado.edu/concern/undergraduate_honors_theses/dj52w6290

Abstract

This paper examines the influence of mental health on labor market outcomes, specifically investigating how this relationship is moderated by socioeconomic status during adolescence. A fixed effects model alongside individual- and household-level controls is used to mitigate the empirical concerns of reverse causality and unobserved individual heterogeneity. The results suggest that being at risk of having depression or being depressed decreases the probability of employment by an average of 2-5 percentage points, decreases the number of weekly hours by an average of 1.5 hours, and decreases the predicted annual earnings by $2,000. However, further research is needed to establish the direction of the interaction between socioeconomic status during adolescence and the complex relationship between mental health and labor market outcomes.

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