Older Americans, Depression, and Labor Market Outcomes

Abstract

We examine the effect of depressive symptoms on the labor market outcomes of older Americans using the Health and Retirement Study (HRS). We take advantage of the longitudinal nature of the HRS from 1994 to 2008 and employ panel data methods to control for time-invariant, individual unobserved heterogeneity. Models that do not take into account individual heterogeneity show that depressive symptoms significantly reduce wages for males and females. In contrast, models that explicitly take into account individual heterogeneity through fixed effect estimation show no economic or statistically significant reduction in wages for those with depressive symptoms.