The causal impact of health status on labour market outcomes: consequences for individuals and households University of Sheffield

Work is a key route to financial security and psychosocial wellbeing and is generally good for people’s health. But there can be adverse effects from long hours, stress and job insecurity.

Health is an important determinant of employment, affecting a person’s chances of gaining employment and adequate reward. Deterioration in health is often the catalyst for people leaving the labour market, and those with poor health have a much lower employment rate than the rest of the population.

This project aimed to shed new light on the causal relationships between an individual’s health status and work outcomes.

The project team primarily used data from the UK Household Longitudinal Study and the Quarterly Labour Force Survey to analyse the impact of factors such as age, gender, job/contract type, health status and household composition on the relationship between an individual’s health and their participation in work.

Key findings

• There is a large gap between the employment rates of those with good and poor mental health. Among workers aged 21–55 years, the employment rate for those with good mental health is 87%, whereas it is 70% for those with poor mental health. But improving mental health for those conditions amenable to treatment may only have a small effect on closing this gap.
• Local labour market circumstances are an important determinant of disability benefit claims – over and above health status – reflecting deep and persistent geographical inequalities.
• Developing a physical impairment doubles the probability that a person experiences presenteeism (reduction in productivity due to health), while developing clinically poor mental health leads to a threefold increase.

In relation to the COVID-19 pandemic, the research found that:

• the segmentation and segregation of workers who have mental health disorders was exacerbated
• disabled people were disproportionately exposed to infection in the workplace during the pandemic.

This research can inform policy development aimed at maximising participation in work in the context of the ageing population, extended working lives and increased prevalence of chronic disease.

Contact information

Questions? Please contact Jennifer Roberts, Professor of Economics, University of Sheffield.

Learn more

For more information about this project, please see the resources below.

Research papers:

Mental health and employment: A Bounding Approach using Panel Data

Dysfunctional presenteeism: Effects of physical and mental health on work performance

The effect of mental and physical health problems on sickness absence

Labor supply and informal care responses to health shocks within couples: Evidence from the UK

New evidence on disability benefit claims in the UK: The role of health and the local labour market

Employment related COVID-19 exposure risk among disabled people in the UK

Exploring mental health disability gaps in the labour market: the UK experience during COVID-19

Policy briefs:

Health shocks within couples: effects on labour supply and informal caring

How can we explain the geographic variation in disability benefit claims in the UK?

What are the effects of chronic mental and physical health conditions on sickness absence in the UK?

What are the effects of poor mental health and physical impairment on presenteeism in the UK? 

How much does mental health influence employment in England and Wales?