No gain in pain: psychological well-being, participation, and wages in the BHPS
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ORIGINAL PAPER
No gain in pain: psychological well‑being, participation, and wages in the BHPS Elena Lagomarsino1 · Alessandro Spiganti2,3 Received: 6 August 2019 / Accepted: 27 August 2020 / Published online: 22 September 2020 © The Author(s) 2020
Abstract Accounting for endogeneity, unobserved heterogeneity, and sample selection in an unified framework, we investigate the effect of psychological well-being on wages and labour market participation using a panel from the British Household Panel Survey. We find the effect of psychological well-being on labour market outcomes to differ across gender. In particular, psychological distress significantly reduces participation across genders, but, conditional on participation, has a significant negative effect on hourly wages only in the female sample. Keywords Self-assessed mental health · GHQ · Sample selection · Endogeneity · Social support network · BHPS JEL Classification: I10 · C23 · H51
Introduction Mental health has been the target of global policy actions since the 2000s. Indeed, on top of the direct moral and social benefits, tackling mental ill health has considerable economic consequences. The costs of mental ill health include both direct costs for e.g. medication, visits to a clinic, and hospitalization, and large indirect costs for society through e.g. absenteeism, presenteeism (a situation in which individuals work at reduced productivity due to poor mental health), turnover, early retirement, and mortality. Recently, the spectrum of mental ill conditions considered by policy makers has widened Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10198-020-01234-4) contains supplementary material, which is available to authorized users. * Alessandro Spiganti [email protected] Elena Lagomarsino [email protected] 1
Department of Economics, University of Genoa, Genoa, Italy
2
Department of Economics, European University Institute, Fiesole, Italy
3
Department of Economics, Ca’ Foscari University of Venice, Venice, Italy
to include milder forms (both diagnosed and undiagnosed), which are responsible for unpleasant emotional states and interfere with daily functioning, but do not affect insight or cognition. Indeed, the impact of these milder forms of mental ill health has become particularly relevant for labour market outcomes with the growth of the service industry and the transition towards knowledge- and emotion-intensive jobs, since they may lead to problems of concentration, loss of memory, decreased motivation, and distraction, thus reducing the emotional and cognitive resources needed to perform daily work tasks. Thanks to a series of targeted strategies,1 the United Kingdom is among the most innovative OECD countries both in terms of awareness about the impact of mental health on employment outcomes and the level of integration of people with a mental illness into the labour force; nevertheless, it is also one of the countries bearing the highest direct and indirect
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