Unemployment and Mental Disorders

This article addresses unemployment and related social factors as risk factors for impaired mental health. Departing from earlier studies of unemployment and mental health, we use first admissions to a psychiatric hospital or ward as our measure of mental illness. We construct the data by merging a longitudinal, representative sample of the Danish population aged 15-64 containing detailed annual information about labor market behaviour, incomes, and sick leaves during a 12-year period with a panel encompassing all cases of psychiatric illnesses and their diagnoses. We estimate conditional logistic regression models for case-control data with unemployment and other labor market statuses during the years preceding the first admission as the key explanatory variables. We find that experiences of long- and medium-term unemployment are followed by an increased probability of the individual being admitted for the first time to a psychiatric hospital. While the impact of previous unemployment experience does not differ between high and low unemployment regions, it differs across phases of the business cycle. This result implies that the eventual impact of a prolonged deep recession is likely to be smaller than expected from the experience from normal times.