The effect of adult psychological therapies on employment and earnings: the effect of adult psychological therapies on employment and earnings

Background: People suffering from common mental disorders (CMD) such as depression and anxiety are more likely to be inactive in the labour market. Psychological therapies are highly effective at treating CMDs, but less is known about their impact on long-term labour market outcomes. Methods: Using national treatment programme data in England, NHS Talking Therapies (NHSTT), with unique linkage to administration data on employment and census records, we estimated the effects of NHSTT on employment and earnings. We used an event study approach using individual fixed effects to capture time invariant confounders and natural recovery. Results: Overall, completing treatment led to a maximum average increase of £17 in monthly earnings (year two) and likelihood of paid employment by 1.5 percentage points (year seven). Those “Not working, seeking work’ saw a maximum average increase in pay of £63 per month (year seven) and likelihood of paid employment by 3.1 percentage points (year four). Patients in the younger age groups (25- to 34-years) saw the largest effect on the likelihood of paid employment by 2.3 percentage points (year seven) and 2.0 percentage points (year five) for 35- to 44-year-olds. Conclusions: Completion of psychological treatment for CMDs through the national NHSTT programme leads to sustained increases in both employment and earnings up to seven years after the start of treatment. Our findings demonstrate the economic benefits of treating CMDs, and how investing in mental health can impact labour market participation.