THE SHORT-TERM EFFECT OF DEPRESSIVE SYMPTOMS ON LABOR MARKET OUTCOMES

We estimated the short-term effects of symptoms 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 exhibiting depressive symptoms reduces the likelihood of employment. We did not, however, find evidence of a causal relationship between depressive symptoms and hourly wages or weekly hours worked. Our estimates are substantially smaller than those from previous studies and imply that depressive symptoms reduce the contemporaneous probability of employment by 2.4 percentage points. In addition, we examined the effect of depression on work impairment and found that exhibiting depressive symptoms increases annual work loss days by about 1.4 days (33%), which implies that the annual aggregate productivity loses because of depression-induced absenteeism range from $900m to $1.9bn in 2009 USD. Copyright (C) 2015 John Wiley & Sons, Ltd.