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Bounding the Causal Effect of Unemployment on Mental Health: Nonparametric Evidence from Four Countries
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Bounding the Causal Effect of Unemployment on Mental Health: Nonparametric Evidence from Four Countries

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  • Cygan-Rehm, Kamila

    (Dresden University of Technology)

  • Kühnle, Daniel

    (University of Duisburg-Essen)

  • Oberfichtner, Michael

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

An important, yet unsettled, question in public health policy is the extent to which unemployment causally impacts mental health. The recent literature yields varying findings, which are likely due to differences in data, methods, samples, and institutional settings. Taking a more general approach, we provide comparable evidence for four countries with different institutional settings – Australia, Germany, the UK, and the US – using a nonparametric bounds analysis. Relying on fairly weak and partially testable assumptions, our paper shows that unemployment has a significant negative effect on mental health in all countries. Our results rule out effects larger than a quarter of a standard deviation for Germany and half a standard deviation for the Anglo-Saxon countries. The effect is significant for both men and women and materialises already for short periods of unemployment. Public policy should hence focus on early prevention of mental health problems among the unemployed.

Suggested Citation

  • Cygan-Rehm, Kamila & Kühnle, Daniel & Oberfichtner, Michael, 2017. "Bounding the Causal Effect of Unemployment on Mental Health: Nonparametric Evidence from Four Countries," IZA Discussion Papers 10652, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10652
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    More about this item

    Keywords

    mental health; unemployment; bounds;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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