The Effect of Depression on Income: Evidence from Colombia

• In Event: Mental Health Care and Its Impacts

Abstract

Depression affects an estimated 10% of individuals worldwide and may have negative impacts on economic activity. We use nationwide administrative data from Colombia to estimate the causal impact of depression on earnings using a difference-in-differences approach that leverages cross-individual variation in the timing of major depressive episodes. Among young, formally employed workers, depressive episodes reduce earnings by 8.2%, an effect that persists for up to 24 months and is primarily mediated by the extensive margin. To further support a causal relationship between depression and earnings, we use propensity score matching to compare labor market outcomes for individuals with depression who plausibly vary only in their access to specialty care. Relative to individuals who do not access such care, those who do experience an increase in earnings which compensates for most of the income loss due to depression.

Authors

• Kaveh Danesh, University of California, San Francisco
  Presenting Author

• Arlen Guarin, The World Bank
  Non-Presenting Co-Author

• Christian Posso, Banco de la República de Colombia
  Non-Presenting Co-Author