The impact of adolescent psychological distress on access and participation in employer sponsored pension plans in the US

Karen Arulsamy

No 202201, Working Papers from Geary Institute, University College Dublin

Abstract: A large body of evidence shows that poor mental health early in life reduces income over the lifespan, but a dearth of evidence exists on how early psychological distress affects long-term savings behaviour. By employing a nationally representative cohort panel (NLSY1997) and linear probability models, this paper provides novel evidence that poor mental health early in life can have persistent effects on lifelong financial security via lower retirement savings. Adolescents (16 to 20 years old) with poor mental health are 4.7 percentage points less likely to have access to and 8.9 percentage points less likely to participate in employer sponsored pension plans at age 30-35. There is no significant difference in pension participation rates when individuals with poor mental health have access to plans. The negative association between adolescent mental health and pension participation is mediated by access to a plan, education, income and employment status. These findings suggest that selection into less favourable employment conditions perpetuated by early mental health problems lowers access to and participation in employer sponsored pension plans.

Keywords: Mental health; psychological distress; pensions; retirement savings; financial security; longitudinal studies; cohort studies (search for similar items in EconPapers)
JEL-codes: D91 G41 J32 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2022-03-11
New Economics Papers: this item is included in nep-age and nep-lma
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