Elsevier

Annals of Epidemiology

Volume 55, March 2021, Pages 41-49
Annals of Epidemiology

Original article
Effects of graduating during economic downturns on mental health

https://doi.org/10.1016/j.annepidem.2020.12.005Get rights and content

Abstract

Purpose

This study examined the effects of economic downturns at the time of graduation on short-term and long-term mental health of graduates.

Methods

Using a large longitudinal dataset whose respondents graduated from their highest level of education between 2001 and 2018 in Australia, the study investigated the effects of initial labor market conditions on psychological distress measures, quality-of-life mental health scales, and diagnoses of depression or anxiety since graduation.

Results

Evidence suggests the presence of a scarring effect of graduating during a recession on the mental health of young adults, particularly significant and persistent for men. Higher unemployment rates at graduation were associated with increased risks of high psychological distress and diagnoses of depression or anxiety, and lower levels of social functioning and mental well-being among men lasting over a decade. The psychological effect was largely driven by young adults with vocational or secondary qualifications or receiving no government allowance at graduation.

Conclusions

Policies should consider the psychological effect of graduating during recessions and focus particularly on vulnerable groups who are susceptible to adverse labor market conditions, such as graduates who are in cyclically sensitive occupations and have less or no work benefits and social protection.

Introduction

Graduating during economic recessions places graduates at a disadvantage. New labor market entrants are often particularly vulnerable to adverse labor market conditions. Studies in the labor economics literature show that economic recessions have scarring effects on the labor market outcomes of young workers graduating in recessions [[1], [2], [3], [4], [5], [6], [7]], including persistent earning losses, fewer jobs opportunities in the market, and a higher likelihood of underemployment and skill mismatch early in their careers [2, 4, 5]. Focusing on male college graduates, studies have shown that the negative wage effect of economic recessions can be persistent on college graduates, fading gradually over a decade [2, 5]. These graduates tend to occupy entry positions longer and have less chance to move into better jobs in the early years, with those graduating from less prestigious colleges and majors suffering more permanent earnings losses [2].

Labor market outcomes, and income more generally, have been long linked to health and health behaviors [[8], [9], [10], [11], [12], [13], [14], [15]]. Theoretical and empirical evidence has indicated that income is associated with good health [8], and unemployment was associated with an increased risk of mortality [13]. For graduates entering the labor market in a recession, adverse initial labor market conditions have been found to associate with increases in mortality at midlife [6, 7], and increases in risks of lower life satisfaction, obesity, and risky behaviors such as smoking and drinking [1]. Studies have also indicated a difference in adverse effects associated with education and gender. The impact of recessions at labor market entry is larger for graduates without a college degree [6] and particularly damaging to women with lower education who are more likely to report poorer general health and have had a general practitioner visit [10].

Labor market outcomes can also impact the mental well-being of these graduates. Economic declines and job or financial loss affect somatic and psychological morbidity through stress, frustration-aggression, and effect budgeting mechanisms [9]. Numerous studies have suggested economic recessions, unemployment, and income declines, measured by individual-level or macroeconomic indicators, are associated with poor mental well-being, psychological distress, and suicidal behaviors [11, [16], [17], [18]]. There is, however, gender heterogeneity in mental health outcomes [11, 16, 19], with men being more likely to experience negative mental health consequences of economic recessions. Some studies show that the association between unemployment and suicidal behavior was only significant for men [20, 21], and the prevalence of poor mental health and the rate of suicide had a slight decrease postrecession among women [22, 23].

While the income and mortality effects of graduation during an economic downturn have been extensively examined [2, 5, 7], there have been fewer studies on the short-term and long-term effects of adverse labor market entry conditions on mental health outcomes of young workers. Previous studies have also tended to draw on more homogenous subjects such as white male college graduates, with less attention on other population groups such as less educated or female graduates [6]. The effects of recessions on mental health for labor market entrants across population groups should be an area of particular policy concern in promoting mental health functioning among young adults. Previous studies have demonstrated that men who left school during the early 1980s recession in the United States had worse mental health at the age of 40 while women had fewer depressive symptoms [24], and the negative wage impact of graduation during a recession was stronger and more consistent on men than women [3, 25]. More research is needed that uses a large and recent longitudinal dataset to understand the mental health consequences of young graduates entering the labor market in times of recession.

The present study examined the short and long-term effects of graduation during a recession on mental health outcomes of young male and female graduates with Australian evidence. Using the Household, Income and Labor Dynamics in Australia (HILDA) survey between 2001 and 2018, the study investigated the effect of initial labor market conditions, measured by the state-level unemployment rates, on psychological distress measures, quality-of-life mental health scales, and the diagnoses of depression or anxiety since graduation from the highest education, including secondary, vocational, and tertiary qualifications. The heterogeneity in mental health effects was assessed by education level and government benefit recipient status.

Section snippets

Data

The analysis used the data from the HILDA survey between 2001 and 2018. The HILDA survey is a household-based longitudinal survey with a nationally representative sample of Australian households. There were 13,969 persons at least 15 years of age who completed an interview in wave 1, and respondents were interviewed approximately one year apart. The survey covers a broad range of socioeconomic information and various mental health measures. The analytical sample consisted of respondents who

Summary statistics and overall trends

The summary statistics for the sample are presented in Table 1. Of 14,208 observations (available in 2007, 2009, 2011, 2013, 2015, and 2017), 17.3% had a high or very high level of psychological distress, and of 6978 observations (available in 2007, 2009, 2013, and 2017), 17.3% had diagnoses of depression or anxiety. The average scores for social functioning, role limitations due to emotional problems, and mental well-being among 33,354 observations (available from 2001 to 2018) were 83.7,

Discussion

The study examined the effect of graduation during high unemployment on psychological distress and mental well-being in the short- and long-run. The results show that the detrimental impact of economic recessions upon graduation on mental health was particularly significant among men. For male graduates, high unemployment rates at the time of graduation significantly increased the probability of a high level of psychological distress, especially the feeling that everything was an effort and the

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