My research explores the relationship between depression and job satisfaction. Less than half of American employees feel satisfied with their jobs. Low job satisfaction affects more than an individual employee’s wellbeing but can reduce productivity, stagnate morale, and increase business costs. One important determinant of job satisfaction is mental health. Depression has increased among all demographic groups amidst the COVID-19 pandemic. In this paper, I explore how depression in adults over the age of 25 affects job satisfaction. I use data from the Americans’ Changing Lives survey in 1986, 1989, and 1994 to estimate the impact of poor mental health on job satisfaction. I use three measures of depression, each constructed from the Center for Epidemiologic Studies Depression Scale (CES-D), and three different models to address endogeneity in the relationship between depression and job satisfaction – namely, fixed effects, lagged mental health status, and instrumental variables regression exploiting the death of a loved one as an instrument. I find significant negative relationships between depression and job satisfaction in both the fixed effects and lagged mental health status models, suggesting that depression may have a causal impact on job satisfaction. Specifically, individuals who are considered clinically depressed experience a 6.5 and 14.7 percentage-point decline in the likelihood of being satisfied with their jobs in the fixed effects and lagged depression models, respectively. The instrumental variable model produces insignificant results. These results suggest that prioritizing employee mental health may lead to increases in job satisfaction, productivity, and efficiency.
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