Online Program

Effects of psychiatric disorders on labor market outcomes: A latent variable approach using multiple indicators

Tuesday, November 5, 2013 : 3:30 p.m. - 3:50 p.m.

Souvik Banerjee, PhD student, Department of Economics, University at Albany:SUNY, Albany, NY
Pinka Chatterji, PhD, Economics, University at Albany, Albany, NY
Kajal Lahiri, Ph.D., Department of Economics, University at Albany: SUNY, Albany, NY
Using a combined sample of about 7500 individuals from the National Comorbidity Survey Replication (NCS-R) and the National Latino and Asian American Study of Mental Health (NLAAS), we examine the effect of psychiatric disorders (depression, panic attack, social phobia and generalized anxiety disorder (GAD)) on a host of labor market outcomes. We estimate a series of structural equation models with latent indices for mental disorders. The latent continuous measures are generated from the model using multiple indicators (symptoms) and multiple causes (determinants) of the disorder and the different indicators are linked to the labor market outcome variable. The latent factor loadings reflect the fact that not all symptoms of a disorder are equally important in explaining the labor market behavior of individuals and disability. Further, we address possible reverse feedback effects of labor market participation on mental illness using new instrumental variable approaches. We find substantial impact of mental illness on employment and labor force participation for both males and females, but the effect on weeks worked and missed work days are significant only for males. We also examine differential effects for different race/ethnic populations. Based on concordance analysis between the conventional binary indicator for a mental disorder and our continuous latent measure, we find that current approaches understate the effect of mental distress on labor market outcomes. We also conduct counterfactual simulation exercises to demonstrate significant labor market benefits from improved treatment due to the newer generation of drugs, and suggest appropriate rehabilitation approaches for the mentally disabled.

Learning Areas:

Biostatistics, economics
Chronic disease management and prevention
Public health or related public policy
Public health or related research
Social and behavioral sciences

Learning Objectives:
Evaluates how different symptoms for four different mental illness (depression, panic attack, social phobia and generalized anxiety disorder) affect labor market participation of mentally sick individual compared to people who are not mentally sick as determined by clinicians.

Keyword(s): Mental Health, Labor

Presenting author's disclosure statement:

Qualified on the content I am responsible for because: I have been a Research Assistant for the NIH project under the supervision of my two c-authors and Co-PIs that has produced this research. I have made a presentation of this paper at a department seminar. I am now an expert on this topic.
Any relevant financial relationships? No

I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.