Psychological barriers to participation in the labor market: Evidence from rural Ghana
A new study published in the Journal of Development Economics examines how mental health conditions shape labour market participation by distinguishing between job take-up decisions and labour supply outcomes.
In “Psychological Barriers to Participation in the Labor Market: Evidence from Rural Ghana”, Leandro Carvalho, Damien de Walque, Crick Lund, Heather Schofield, Vincent Somville, and Jingyao Wei conduct a two-phase study to better understand how depression and anxiety affect labour market behaviour. They examine job take-up, labour supply and earnings conditional on take-up, and quit rates to unpack the relationship between mental health and labour market outcomes.
In the first phase, women in rural Ghana were asked whether they would accept a cash-for-work job during the lean season, when alternative employment is scarce. Individuals with depression and anxiety were much more likely to decline job offers outside the home, while being equally likely to accept work-from-home positions. In the second phase, jobs at home were randomly offered to those willing to work from home. In this setting, neither depression nor anxiety predicted work completion, income, or quit rates.
Taken together, the findings suggest that poor mental health may reduce participation in traditional jobs outside the home through lower take-up, while work-from-home opportunities are not associated with lower take-up or productivity. The results point to important differences between these types of jobs for individuals experiencing poor mental health.