Is temporary employment a cause or consequence of poor mental health? A panel data analysis

Mental health status has an association with labour market outcomes. If people in temporary employment have poorer mental health than those in permanent employment then it is consistent with two mutually inclusive possibilities: temporary employment generates adverse mental health effects and/or individuals with poorer mental health select into temporary from permanent employment. We apply regression analyses to longitudinal data corresponding to about 50,000 observations across 8,000 individuals between 1991 and 2008 drawn from the British Household Panel Survey. We find that permanent employees who will be in temporary employment in the future have poorer mental health than those who never become temporarily employed. We also reveal that this relationship is mediated by greater job dissatisfaction. Overall, these results suggest that permanent workers with poor mental health appear to select into temporary employment thus signalling that prior cross section studies may overestimate the influence of employment type on mental health.