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In a reply to our Mets and Yankees post, a commenter mentioned that poor mental health is (obviously) affiliated with poor labor market outcomes. There is actually a decent literature on this, but here is the most recent paper published on this question:

 The Effect of Depression on Labor Market Outcomes
by Lizhong Peng, Chad D. Meyerhoefer, Samuel H. Zuvekas  –  NBER Working Paper #19451

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.

Your mileage may vary. But to me, these effects, to the extent that they can be measured, seem surprisingly small particularly when placed in the context of the arguments in the previous post (that central planning based trial and error might not produce outcomes nearly as desirable as competitive trial and error).

5 Responses to “Mental Health and Labor Market Outcomes”

  1. Harry says:

    As sympathetic as I am to people with disabilities, I have a tough time buying the above touchy-feely stuff, and it may undermine genuine treatment of serious mental illness. (Notice how I begged the question twice there.)

    But where does responsibility start for one’s life? So you slacked off and did not learn your times tables, fractions, vocabulary, and other elements that would help you through the world, and now you are depressed about not affording a BMW or Fendi luggage as your drug dealer friends enjoy, until they go to the joint? Why are we to blame this sorry situation on something out of your control, and then to offer psychological or psychiatric care for the rest of your life, plus food stamps and a welfare check, just because it is tough to get up in the morning and go to work?

    Understand, people, that our government spends billions to employ counselors to encourage others to play this game of helplessness and dependency.

    So while I do have sympathies for the ill and disabled, for those not equipped well for life, whom we have known well and deserve our hand, let’s try to take care of them, and tell as many malingerers as we can find and tell them to take a hike.

    I guess that means I am not a Humanitarian.

  2. Harry says:

    Sorry, WC, I got diverted from your quotation about depression and productivity. Not being an expert on depression but being a productivity expert, I have found that whenever one has the opportunity to involve people in the meaning, often the financial meaning, of their work, they do the most creative things, just for the enjoyment of it, and this should not surprise us.

    The behaviorists and the materialists argue we spend our lives working for bread. OK, that is an exaggeration, but not far. If we are so lucky, we do hard work for the fun of it, but then in all of our lives, if we are fortunate to get work, some of it is plain work, and for most of us who are not royalty, there have been times of desperation. So my job is boring, and I am getting depressed.

    If you have a company, the best way to make your employees happy is to amuse them, and then next reward them with praise, and then to pay them well to keep them. Marxists do not think this way, so they failed.

  3. Greg Werbin says:


    I’m not sure what your background is. You’re probably right about productivity, and as a complete non-expert I’m inclined to agree from my own experience.

    But your first comment was absurd beyond response. Do you really think that’s what’s going on here? Is that really how you see depression and poverty? Moreover, I trust these authors on both their measures of depression and their data analysis capabilities. They found an empirical effect that should be robust to armchair presumption.

    • wintercow20 says:

      I learned of the paper since I went to Cornell with Chad! (So of course that means the work was top notch, as one would expect from all Cornellians!)

    • Harry says:

      Greg, I am happy to eat a large helping of crow commenting idly about depression. I’m no psychiatric or psychological expert, and it was hubris that caused me to freely hazard an opinion. I must have thought I was Thomas Jefferson, the polymath . My apologies to WC, too, At times I ignore his point, sometimes deliberately, to change the subject, but often to add something to expand on the question he raised. Mea culpa.

      I hope I am not being defensive by saying that I distrust psychological excuses for ordinary human problems like sloth, greed, pride, and other deadly sins which we all commit. My point was, whatever the shrink says, one has to come to grips with these failings, and not blame someone else; maybe even the shrink might say that.

      And so we do not have to spend $40 billion on the shrink industry, we, being the federal government and Inquisitor Kathleen Sibelius, Death Panel mistress.

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