Psychiatric disorders and labor market outcomes: evidence from the National Comorbidity Survey-Replication

This paper uses the National Comorbidity Survey-Replication to estimate effects of recent psychiatric disorder on employment, hours worked, and earnings. We employ methods proposed in Altonji et al. (2005a) which use selection on observable traits to provide information regarding selection along unobservable factors. Among males, disorder is associated with reductions in labor force participation and employment. When selection on observed characteristics is set equal to selection on unobserved characteristics, the magnitudes of these effects for males are 9 and 14 percentage point reductions for participation and employment, respectively. Among females, we find negative associations between disorder and labor force participation and employment, but these estimates are more sensitive to assumptions about selection. There are no effects of disorder on earnings or hours worked among employed individuals.