Early Onset Mood Disorders, Human Capital Accumulation, and Labor Market Outcomes in Early Adulthood

Health status during childhood and adolescence has been shown to be an important determinant of learning and educational attainment; however, there exist relatively few studies of the effect of mental health during adolescence on human capital accumulation and labor market outcomes. Using data from the National Longitudinal Survey of Youth 1997 cohort (NLSY-97), this study establishes a link between early onset depression, post-secondary human capital accumulation, labor market outcomes, and behavioral outcomes - including marriage, criminal activity and binge drinking. The effect of early onset depression is estimated using a linear regression model, which controls for a variety of demographic characteristics, standardized test scores, and other underlying health issues. A specification including sibling fixed effects to reduce omitted variable bias is also reported. The results indicate that the long-term effects of early onset depression are significant, including a 22.2% increase in the annual propability of arrest, and a 7.8% decrease in annual income. Further, controlling for recurring symptoms of depression provides insight into the mechanisms by which adolescent depression affects long-term outcomes. These results indicate that both the initial depressive episode and recurring symptoms are important determinants of labor market and behavioral outcomes in early adulthood. More specifically, contemporaneous symptoms of depression appear to be an important determinant of binge drinking, criminal activity, and unemployment, than depression during adolescence. On the other hand, income and whether or not the individual has married appear to be affected both by depression during adolescence as well as recurrent symptoms. This study adds significantly to our understanding of how mental health impacts long-run outcomes, and the results suggest that sucessful interventions to reduce the long-run negative impact of mood disorders must prepare individuals to deal with the likelihood of future depressive episodes in addition to treating existing symptoms.