The effect of labor market shocks on mental health outcomes: evidence from the Spanish Great Recession

Eduardo I. Polo-Muro ()
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Eduardo I. Polo-Muro: Department of Economics. Universidad Pablo de Olavide.

No 21.08, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: This research examines the response in terms of demand for mental health care when individuals face a negative economic shock that impairs mental health. It exploits the sudden increase of the unemployment rate in Spain during the period 2007-2009 to analyze the long-run consequences of the labor market deterioration caused by the Great Recession on mental health. First, I analyze the impairment of self-evaluated mental health as a consequence of the Great Recession and if it prevails during the economic recovery. In addition, I estimate if the effect on self-reported mental health is reflected in the demand for mental health care. The results indicate that individuals displaced from their jobs are more likely to report worse mental health, to take drugs for mental illness, and to visit a mental health specialist. Using a labor market shock at the aggregate level, the findings from a differences-in-differences design show that the economic downturn increases the differences between employed and unemployed individuals in self-evaluated mental health. However, a recession reduces the prescription of mental health drugs, and the effect on medical attendance is insignificant. The opposite evidence regarding self-evaluated mental health and medical behavior might suggest the presence of a stigma associated with mental health.

Keywords: Mental health; Health Care; Unemployment; Great Recession (search for similar items in EconPapers)
JEL-codes: I12 I14 I18 J60 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021
New Economics Papers: this item is included in nep-eur, nep-hea and nep-ias
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