The effect of adult psychological therapies on employment and earnings: evidence from England

Klaudia Rzepnicka, Emma Sharland, Marta Rossa, Ted Dolby, Ekaterina Oparina, Rob Saunders, Daniel Ayoubkhani and Vahé Nafilyan

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Background People suffering from common mental disorders (CMDs), such as depression and anxiety, are more likely to be inactive in the labor market. Psychological therapies are highly effective at treating CMDs, but less is known about their impact on long-term labor market outcomes. Methods Using national treatment program data in England, NHS Talking Therapies (NHSTT), with unique linkage to administration data on employment and census records, we estimated the effects of NHSTT on employment and earnings. We used an event study approach using individual fixed effects to capture time-invariant confounders and natural recovery. Results Overall, completing treatment led to a maximum average increase of £17 in monthly earnings (year 2) and a likelihood of paid employment by 1.5 percentage points (year 7). Those ‘Not working, seeking work’ saw a maximum average increase in pay of £63 per month (year 7) and a likelihood of paid employment by 3.1 percentage points (year 4). Patients in the younger age groups (25–34 years) saw the largest effect on the likelihood of paid employment by 2.3 percentage points (year 7), followed by those aged 35–44 years with 2.0 percentage points (year 5). Conclusions Completion of psychological treatment for CMDs through the national NHSTT program leads to sustained increases in both employment and earnings up to 7 years after the start of treatment. Our findings demonstrate the economic benefits of treating CMDs and how investing in mental health can impact labor market participation.

Keywords: earnings; employment; labor market outcomes; mental health; NHS talking therapies; psychological therapies; NHS Talking Therapies (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2026-02-27
New Economics Papers: this item is included in nep-hea
References: Add references at CitEc
Citations:

Published in Psychological Medicine, 27, February, 2026, 56. ISSN: 0033-2917

Downloads: (external link)
https://researchonline.lse.ac.uk/id/eprint/137239/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:137239

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().