Adverse effects of suffering from clinical depression in the labor market: — a chilean case

Abstract

Medical conditions can be very detrimental for individual’s development of their daily activities, specially when they influence people´s mood states, deterring them from accomplishing their labor goals or the things they would like to do just for fun, in a healthier context. Through this working paper we hope to deliver a useful parsimonious approach aimed to disentangle the impact of having ever suffered from clinical depression in relevant labor market outcomes, such as employment and income from labor. For our salary variable we built a classic OLS model and found that depression accounts for a 18% reduction in income in comparison to healthy people (people without a depression diagnosis in the past). For our second approach, we formulated a probit and a logit model by regressing our unemployment binary variable (that takes the value 1 for individuals prone to be unemployed) against our depression indicator. Our findings suggested a slight 1.8% increasing in the likelihood of being unemployed for people who was ever diagnosed with depression. With these findings we hope to give some support for policy makers to include in their agendas, as a top medical priority, depressive conditions. A final contribution of our findings would be the much greater identified tendency to suffer from depression for females, which naturally would demand differentiated treating between both genders when it comes to policy makers for addressing their efforts to minimize the social cost of this disease, given that public resources are scant (specially for emerging economies) and must therefore be focused on the ones that require them the most.