Queen, Will (2022). Adolescent Depression and Adult Labor Market Outcomes.
The prevalence of adolescent depression has more than doubled in the past ten years.Youth with depression do worse in the labor market as adults, but it is unclear whetheradolescent depression plays a causal role in determining labor market outcomes. Thisdissertation uses a mediation analysis framework to estimate the direct and indirect effects ofadolescent depression on adult earnings and wages. Adolescent depression leads to many adverseoutcomes, including poor performance in school and a higher risk of mental health disorders. Itreat adult depression and educational attainment as mediators of the effect of adolescentdepression on labor market outcomes. First, I conduct a literature review on the relationship between adolescent depression andlabor market outcomes. I establish a conceptual framework for thinking about the long-termimpacts of adolescent depression and discuss the challenges in identifying causal effects. Next, Iproduce an in-depth descriptive analysis of how adolescent depression relates to adult earningsand wages. I use mediation analysis and the difference method to estimate the direct and indirecteffects of adolescent depression. This approach reconciles many seemingly conflicting results inthe previous literature. To address several issues of endogeneity, I then use instrumentalvariables and a system of equations to identify causal effects of adolescent depression onearnings and wages. I estimate the indirect effects through years of education and adultdepression, as well as the leftover ‘direct’ effect. I find that adolescent depression lowers educational attainment and increases thelikelihood of adult depression, leading to lower average earnings of about 5% and lower averagewages of about 3.7%. These results are robust to identification strategy and alternativemeasurements of several variables. In contrast, using instruments for identification drops thedirect effect of adolescent depression closer to zero, suggesting that findings of a direct pathwayare driven by omitted variables bias. The findings of this dissertation imply that there are largeeconomic benefits to better preventing and treating adolescent depression. The long-term labormarket consequences of adolescent depression can also be avoided by addressing the effects ofadolescent depression on mediating outcomes like educational attainment and adult depression.
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