The purpose of this paper is to use longitudinal Canadian data from the National Population Health Survey (1994-2006) to examine the impact of provincial unemployment rate on mental health as measured by the short form depression scale.
To control for the unobserved individual specific factors, the study utilized individual-specific fixed-effects model.
The study found that, for the overall model, provincial unemployment rate has a significant positive impact on depression. The study further examined the impact of unemployment rate on depression for a number of sub-groups based on gender, age, marital status, and education. The results suggest that the impacts of unemployment rate on depression are heterogeneous across different sub-groups.
The results of this study have important policy implications. Previous studies suggest that mental stress may lead to risky health behaviours such excessive drinking, substance use, and smoking. These risky health behaviours may have long term health consequences in terms of chronic conditions such as heart disease, cancer, etc. Thus policy makers may consider taking appropriate steps to provide mental health support during the period of recession. Such support may also be helpful for the unemployed individuals who are too depressed to search for job.
Previous studies on this issue may suffer from potential bias since they omitted unobserved individual specific factors from the estimating equations. This paper has taken the opportunity of utilizing longitudinal Canadian Population Health Survey and adopts an individual specific fixed effects method to estimate the effects of macroeconomic conditions on mental health. All of the studies reviewed here used data from the USA. So far no study has examined the impact of unemployment rate on mental health using Canadian data. It is interesting to conduct a study using Canadian data since there are important differences between Canada and the USA with respect to labour market policies and health care systems.
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