Depression and labor supply: Evidence from the Netherlands

Area of Science:

• Economics
• Psychology
• Sociology

Background:

• Mental health, specifically depression, is a growing concern with potential societal and economic implications.
• Understanding the link between depression and labor market outcomes is crucial for policy and individual well-being.

Purpose of the Study:

• To estimate the relationship between depression and various labor-market outcomes in the Netherlands.
• To investigate potential mediating factors, such as happiness, life satisfaction, and beliefs about the future.

Main Methods:

• Utilized longitudinal data from the Longitudinal Internet studies for the Social Sciences (LISS) panel (2008-2018).
• Employed statistical analysis to examine associations between depression and labor market participation, employment, and working hours.

Main Results:

• Depression is linked to reduced likelihood of paid employment for women (conditional on labor force participation).
• Depression is associated with lower labor force participation, reduced paid employment, and less full-time work for men.
• Increased severity of depressive symptoms correlates with more negative labor-market outcomes for both genders.
• Happiness, life satisfaction, and pessimistic future beliefs partially mediate the observed effects.

Conclusions:

• Depression significantly affects labor-market outcomes, with gender-specific patterns observed.
• The severity of depression is a critical factor influencing the extent of labor-market disadvantage.
• Psychological factors play a role in mediating the relationship between depression and employment.