An Analysis on Danish Micro Data - School of Economics and ...

The variable antidep plays two roles in the analysis. First of all, because the potential depression is
not observed from the available data, the use of antidepressants is used as an indication thereof. In
passage 4.1 the limitations to this method were put forward. Second, it is the main explanatory
variable in the analysis.
There are some drawbacks to this approach. To begin with, the effect from antidepressants on
employment that I am trying to find might be non-existent, since the medicine might keep down the
depression such that it has no effect on labour supply 57 Secondly, the use of antidepressants is an
imperfect measure, because there is a self-selection into treatment based on the degree of
depression, which is unobserved. People that are more depressed will be more likely to seek
treatment, and at the same time be more likely to be out of work due to other circumstances such as
socio-economic and demographic aspects. 58 If the impact of self-selection is not taken into account,
the gains from treatment are possibly underestimated. 59 Third, since variation in mental health care
treatments has a tendency to be greater than medical care in general 60 , utilizing the medicine use as
an indicator of depression is connected with greater uncertainty than otherwise.
In view of the fact that the medicine data are only available from 1995 until 2003, it is not possible
to investigate whether the patients have taken antidepressants before. Therefore an implicit
assumption in this analysis is that it is the first time the observed person takes antidepressants.
4.2.3 The control variables
As mentioned in chapter 2, the labour supply decision is influenced by a lot of factors and in order
to capture the true effect of using antidepressants, these factors have to be controlled for in the
regression. It seems obvious to include some demographic variables such as age, ethnicity and the
presence of children in a certain age group. Furthermore, a variable documenting the highest level
of completed education has been divided into three dummies, which indicate whether the individual
has taken a basic, a short or a longer lasting education. A variable denoting the squared age of the
individual is created. The idea behind this variable is to capture non-linearities in the connection
between age and employment. 61
57 Ruhm (1992)
58 Galarraga et al. (2006)
59 Duggan and Evans (2005)
60 Frank and McGuire (1999). The authors mention two reasons for greater variation in treatment in the mental health
care than in medical care in general. First of all, there are a variety of professions within mental health care and second,
the clinical uncertainty may be greater. It should be noted though that they consider American circumstances.
61 Theodossiou (1998)
35