The Role of Employment and Employers in Mental Health

Abstract

How does employment affect workers' mental health, and how do employers mediate this relationship? We investigate these questions on employer-employee matched data for Denmark from 2008 onwards, linked to administrative records on mental-health prescriptions. We leverage job starts and job separations in a dynamic difference-in-differences design, comparing workers with “soon-to-be-treated” peers, matched on pre-treatment mental-health histories and demographics. Results indicate that job losses produce an increase in the incidence of mental health medication of about 20-25%, while job finding generates a symmetric decline in medication of about 15-20%. The beneficial effects of employment are especially strong in firms with low prevalence of mental health issues and muted in firms with high prevalence. Using the same empirical set-up for firm-to-firm transitions without intervening unemployment, we find that employee mental health experiences changes of the same sign as the differential in the firm-level mental health. Joint work with Mathias Fjællegaard Jensen, Barbara Petrongolo and Rentian Zhu.