Psychiatric Disorders and Employment: New Evidence from the Collaborative Psychiatric Epidemiology Surveys (CPES)

This paper uses data from the NIMH Collaborative Psychiatric Epidemiology Surveys to estimate the effects of psychiatric disorder on employment. We model the employment and disorder outcomes jointly with a bivariate probit model using local availability of treatment resources and early onset of disorder as identifying variables. As a complement to our main findings, we apply methods proposed in Altonji, Elder and Taber (2005) that allow one to gauge the sensitivity of the estimated effect of disorder to various degrees of selection on unobserved variables, without relying on identifying exclusions. Among males, psychiatric disorder in the past 12 months is associated with a reduction of 9 to 11 percentage points in the likelihood of current labor force participation and a reduction of about 10 percentage points in the likelihood of employment. Among females, we also find negative, but less consistent, associations between recent disorder and labor force participation and employment.

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