Poverty, socioeconomics factors and mental health : an economics approach

Abstract

This study seeks to analyse the impact of (i) poverty status, measured through binary outcomes of relative poverty and material deprivation; (ii) working hours and (iii) employment contract type on mental health. The importance of good mental health is unequivocal for any nation, as it contributes towards society’s welfare. From a cost perspective, a noteworthy percentage of health expenditure is usually allocated towards mental health purposes. Moreover, mental health issues can spillover to physical health issues giving rise to further healthcare costs. In the Maltese context mental health has a more vital role due to its consequences on labour, the country’s core natural resource. Labour market outcomes, such as human brain capital and productivity, are vary with mental health levels. To pursue such objectives, within-fixed effects are administered to panel data, whilst controlling for relevant confounding variables. Such a method should contribute towards the isolating the causal impact of the regressors on mental health. The results indicate that the poverty status indicators exert a significant negative impact, with material deprivation having a larger effect. Working hours exhibit a threshold effect as their effect only significantly affects mental health upon exceeding a certain number of hours. Robustness checks reveal that the threshold lies around the range of fulltime working hours, beyond which working hours erode mental health. Lastly, no significant association exists amongst employment contract type and mental health. The findings stress the detrimental effect of poverty, despite the limited attention that is devoted to it and the current policies in place. Moreover, the need for a work-life balance is to be prioritised by individuals and relevant stakeholders.