An Econometric Analysis of the Mental-health Effects of Major Events in the Life of Elderly Individuals

Major events in the life of an elderly individual, such as retirement, a significant decrease in income, death of the spouse, disability, and a move toa nursing home, may affect the mental health status of the individual. Forexample, the individual may enter a prolonged depression. We investigatethis using unique longitudinal panel data that track labor market behavior,health status, and major life events, over time. To deal with endogenousaspects of these events we apply fixed effects estimation methods. We findsome strikingly large effects of certain events on the occurrence of depression. We show that the results are of importance for the design of healthcare and labor market policy towards the elderly.