A Structural Analysis of Mental Health and Labor Market Trajectories

Gregory Jolivet, University of Bristol and IFS and Fabien Postel-Vinay, UCL and IFS

We analyze the joint life-cycle dynamics of labor market and mental health outcomes while allowing for two-way interactions between work and mental health. We model selection into jobs on a labor market with search frictions, accounting for the level of exposure to stress in each job using data on occupational health contents. Taking our model to British data from Understanding Society combined with information from O*NET, we estimate the impact of job characteristics on health dynamics and the effects of health and job stress contents on career choices. We use our model to quantify the effects of job loss, health shocks or job stress shocks that propagate over the life cycle through both health and work channels. We also estimate the (large) values workers attach to health, employment or non-stressful jobs.