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Keywords:

  • depression;
  • mental health;
  • NLSY

Abstract

Prior studies have consistently found the incidence and persistence of depression to be higher among persons with low incomes, but causal mechanisms for this relationship are not well understood. This study uses the National Longitudinal Survey of Youth 1979 cohort to test several hypotheses about the robustness of the depression–income relationship among adults. In regressions of depression symptoms on income and sociodemographic variables, income is significantly associated with depression. However, when controls for other economic variables are included, the effect of income is considerably reduced, and generally not significant. Employment status and the ratio of debts-to-assets are both highly significant for men and for women both above and below the median income. Fixed-effects estimates suggest that employment status and financial strain are causally related to depression, but income is not. Instrumental variable estimates suggest that financial strain may not lead to depression. Copyright © 2005 John Wiley & Sons, Ltd.