Mental Health and Labor Market Outcomes

Abstract

There are many and various connections between mental illness and employment. This chapter will begin with an overview of mental illness and the main links with employment. The self-selection or social drift hypothesis suggests that people with mental illness face higher risks of employment difficulties due to various disadvantages. The social causation hypothesis suggests that certain characteristics of workplaces can trigger or worsen mental illness. The relevance of these explanations depends on the type of mental illness that is being considered. Using common mental disorders, psychotic disorders, and youth mental health as examples, the evidence relating to these arguments is illustrated. Responses to them include anti-stigma campaigns, early intervention for mental illness, supported employment models, workplace awareness, stress alleviation and general well-being programs, occupational health interventions, and policies targeting employment practices. Mental illness and employment are also indirectly linked through their impacts on carers (caregivers), family members, and colleagues. Evidence on these links and responses comes mainly from high-income countries, and a great deal remains unknown in low- and middle-income countries. The COVID-19 pandemic brought further uncertainties regarding macroeconomic recession and new work practices, affecting jobs and employee mental health. This chapter highlights key evidence (and knowledge gaps) on the links between mental illness and various facets of employment to help decision-makers prioritize appropriate actions to the benefit of individuals, employers, wider society, and the national economy.