Seminar: Light at the End of the Tunnel - Unemployment and Depression after Age 50

Recent literature reports a U-shape in mental health over the life-cycle, with mental health dipping during prime working ages. However, what is behind the U-shape remains a mystery. We find that across countries (U.S., UK and continental Europe) the U-shape is present for unemployed and disabled men, but not for employed and retired men, who have stable mental health scores. We hypothesize that the social norm (expectation) of work has a detrimental causal effect on the mental health of those not able to abide by it (e.g., the unemployed and disabled) and that this effect should disappear with retirement as it becomes more accepted for individuals not to work. Using SHARE data on individuals aged 50+ from 11 European countries, we regress the mental health of the unemployed and disabled on the age-, country-, and wave-dependent retirement fraction (our proxy for the social norm of work) and find statistically and economically significant effects. This suggests that the U-shape in mental health is the result of changes in the social norm (expectation) of work, which primarily affect the unemployed and disabled.