Work, Retirement, and Depression

This study investigates the relationship between depression and labor force participation by examining whether retirement induces depression or depression discourages labor force participation. The sample is drawn from newly available, nationally representative data of those 50–64 years old using the 2006 Korean Longitudinal Study of Aging. We model two possibly inter-related outcomes; depression and work. We first examine whether retirement influences depression, using the mandatory retirement provisions of the Korean labor force to identify a pathway to retirement that is not a consequence of depression. We then estimate the determinants of current work using instrumental variables for depression. We find that mandatory retirement is not associated with subsequent depression but find evidence that depression leads to reduced labor force participation, after using instrumental variables to predict the existence of depressive symptoms among respondents. We find strong evidence that depression leads to reduced labor force participation. Although retirees are often more depressed than workers, the causes that induce retirement, such as poor health, care-giving responsibilities, and inability to find a job, are also associated with depression.