Unemployment and Mental Health: Some Evidence from Panel Data

In this paper the effects of unemployment on mental health are analysed. A simple model where both the occurrence of and duration of unemployment are allowed to affect mental health is specified. Panel data are used to control for 'fixed effects', i.e. omitted variables that are constant over time. The main finding is that those who are unemployed seem to have worse mental health than others whereas no effects were found after having controlled for fixed effects.