The Effects of Depressive Symptoms on Earnings

• Published in: Southern economic journal Vol. 75; no. 2; pp. 383 - 409
• Main Author: Cseh, Attila
• Format: Journal Article
• Language: English
• Published: Stillwater Southern Economic Association 01.10.2008
• Subjects: Absenteeism; Causes of; Coefficients; Cross-sectional studies; Depression; Depression, Mental; Depressive disorders; Diagnosis; Earnings; Economic aspects; Economic theory; Employment; Evolution; Labor market; Labor markets; Labour productivity; Longitudinal studies; Major depressive disorder; Men; Mental depression; Mental disorders; Mental health; Mental health care; Mental illness; Personality; Personality psychology; Personality traits; Productivity; Psychological aspects; Regression analysis; Social surveys; Studies; U.S.A; Wage levels; Wages; Wages & salaries; Workers; United States
• ISSN: 0038-4038; 2325-8012
• DOI: 10.1002/j.2325-8012.2008.tb00910.x

Conventional wisdom is that depression lowers productivity. The magnitude of this effect has been of interest to economists and other social scientists as well as medical researchers. In this paper, I take advantage of the longitudinal nature of the National Longitudinal Survey of Youth 1979 to investigate the effects from a dynamic perspective and to control for unobserved heterogeneity in a fixed-effects framework. Exploiting the fact that the data set provides information about depressive symptoms in multiple years, I am able to study how changes in depressive symptoms impact productivity. My results indicate that taking personality into account is important in estimating how depression affects wages. While ordinary least-squares results render a strong negative significant effect to depressive symptom measures (especially in the men's sample), taking unobserved personal characteristics into account reduces the effects of these measures.