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W&L Economists Find Link between Unemployment, Mental-Health Problems

Two Washington and Lee University economists leading a group of researchers have found that individuals who have suffered from long-term unemployment in the past year — those unemployed for longer than 25 weeks — are three times more likely than people employed throughout the past year to experience mental-health issues for the first time.

The study also concluded that people with more than a high school education suffer greater adverse psychological impacts of long-term unemployment than those with less education.


Arthur Goldsmith, the Jackson T. Stephens Professor of Economics at Washington and Lee, conducted the study with colleagues Timothy Diette, assistant professor of economics at W&L and the lead investigator on the study; Darrick Hamilton, associate professor of urban policy at New School University; and William Darity, Arts & Sciences Professor of Public Policy at Duke University.

Goldsmith reported on the findings on Wednesday, Oct. 19, when he participated in a congressional briefing on the psychological benefits of employment and the impact of joblessness, sponsored by the American Psychological Association.

Goldsmith said the new study isolated a population of resilient people — individuals who either had never had a bout of clinically defined emotional-health issues in their life or had their first bout of problems in the most recent year.

“In looking at this group of resilient individuals, we compared the psychological health of those who were fully employed with those who were exposed to short-term unemployment or less than 25 weeks of involuntary joblessness, and with people who were exposed to long-term unemployment over the past year,” Goldsmith explained.

“The reason we focus on this group is that if you’re 55 years old, and you’ve never had a bout of poor emotional well-being that would be described clinically in that way, and have your first bout in the past year when you are exposed to unemployment, it’s very unlikely that your poor mental health led to the unemployment rather than your unemployment leading to the poor mental health. Thus, we are able to address the issue of causality that has plagued prior studies of the link between unemployment and mental health.”

Goldsmith said that their data show that individuals who were either fully employed or suffered short-term unemployment show little difference in the likelihood of first-time mental-health issues.

“On the other hand, we found that people exposed to long-term unemployment were three times as likely as employed people over the past year to be exposed to their first bout of psychological distress in a clinically defined way,” he said.

Goldsmith noted that one of the defining features of the past four years of the American economy has been an abnormally large number of individuals exposed to long-term unemployment. “This is extremely different from any other period we’ve had other than the Great Depression,” he said.

Goldsmith said the study revealed that there are two primary pathways or sources of poor mental health due to long-term unemployment, depression and general anxiety. “When people are exposed to long-term unemployment, they obviously feel that they’ve lost control of their capacity to earn a living and take care of their families,” he said. “They worry about their futures.”

Minority groups were also found to suffer larger psychological impacts than non-minority groups in the study. Goldsmith said that is likely because it compounds their concerns about their capacity to do well in the labor market when there is already a history of discrimination based on race and ethnicity.

The increased incidence of psychological impact on more highly educated workers is, Goldsmith observed, particularly noteworthy given the kind of recession that the United States has experienced.

“This started on Wall Street, which is characterized by highly educated individuals. Consequently, these findings bode badly for the overall costs of the Great Recession” that started in 2007, he said. “People with a lot of education tend to believe that they have control of events in their lives and are self-blamers. That is really damaging to emotional well-being.”

In his remarks before the committee on Wednesday, Goldsmith emphasized that in addition to these psychological impacts on individuals, unemployment damages the social fabric of society.

“We see divorce rates are higher during recessions; marriage rates fall during recessions; children growing up in families with unemployed parents perform more poorly in school and tend to have more behavioral problems,” he said. “Unemployment is tearing at the very fabric of our society, and I would suggest that we look at this with a greater sense of urgency.”

One recommendation that Goldsmith offered to address what he called a “stubborn labor market” is an initiative that would focus on young Americans.  He argued for a public-private partnership to create a summer mentorship program for youths of high-school age to give them a better sense of the skills they will need for success in the labor market over the course of their lives

“The idea,” he said, “is to connect youths to meaningful work, for them to see the implicit and financial rewards associated with good work, to recognize the skills needed to succeed in a global workplace, and to begin developing the relevant skills for success.”

News Contact:
Jeffery G. Hanna
Executive Director of Communications and Public Affairs
(540) 458-8459

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