Social scientists have long suggested a connection between unemployment and mental health. However, the direction of causation is unclear: Poor mental health can lead to joblessness, highlighting the challenge of generating an accurate estimate of the impact of unemployment on mental health. In addition, virtually all of these studies use either self-reported measures of mental health or broad measures of emotional well-being such as self-esteem or constructs of general emotional health which are less than ideal.
A shortcoming in the existing literature is that scholars have yet to examine whether race explains the degree that unemployment causes psychological distress. This paper uses measures of mental health to estimate the link between these two factors for both blacks and whites.