Mental Health, Educational Attainment, and Occupational Choice
Abstract:
Poor mental health, such as depression, not only decreases well-being but also reduces work productivity, earnings, and labor supply. Previous research on mental health and life-cycle labor outcomes focuses on working-age adults and takes education as given. Yet, poor mental health is linked to lower educational attainment, which suggests potential gains to early mental health improvements that can affect educational decisions. This paper builds a life-cycle model of educational attainment and occupational choice, in which poor mental health can affect decisions through utility costs and productivity. I estimate the model using the National Longitudinal Survey of Youth 1997. Policy experiments show that mental health improvements before education decisions are made can be far more valuable than policies that intervene once education is largely fixed. For example, 17 year olds in poor mental health are willing to pay, on average, $17,180 to halve the probability of poor mental health one year later. When the same intervention is delayed until age 22, after most schooling decisions are complete, the average willingness to pay drops to $5,116. This discrepancy highlights the importance of the timing of health interventions and, more generally, policy affecting young people, especially during critical periods of human capital accumulation.
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