Working paper

Políticas públicas

Dirk Foremny, Pilar Sorribas-Navarro, Judit Vall Castelló

2022/07: Income insecurity and mental health in pandemic times

This paper provides novel evidence of the mental health effects of the Covid-19 outbreak. Between April 2020 and April 2022, we run four waves of a large representative survey in Spain, which we benchmark against a decade of pre-pandemic data. We document a large and sudden deterioration of mental health at the beginning of the pandemic, as the share of people reporting being depressed increased from 16% before the pandemic to 46% in April 2020. This effect is persistent over time, which translates into important and irreversible consequences, such as a surge in suicides. The effect is more pronounced for women, younger individuals and those with unstable incomes. Finally, using mediation analysis, event studies and machine learning techniques, we document the role of the labor market as an important driver of these effects, as women and the young are more exposed to unstable income sources.