Psychological distress after employment transitions: the role of subjective financial position as a mediator

Objective: To explore the extent to which the mental health effects of transitions into unemployment, or other forms of non-employment, and vice versa, are mediated by financial changes. Methods: Longitudinal analysis of the British Household Panel Survey from 1991 to 2000. There were 89 264 person-years of observation from 14 686 individuals aged >= 16 years. Main outcome measure was psychological distress measured by the 12-item General Health Questionnaire. Results: Transitions to unemployment were associated with increased risk of psychological distress for men (adjusted odds ratio (OR) 3.15 (95% confidence interval (CI) 2.50 to 3.98)) and for women (OR 2.60 (95% CI 1.97 to 3.43)). Women who left work to look after the family were also more likely to experience psychological distress (OR 1.72 ( 95% CI 1.45 to 2.05)). A reduced risk of psychological distress was seen for transitions from unemployment to paid employment for men (OR 0.52 ( 95% CI 0.41 to 0.68)) and for women (OR 0.68 (95% CI 0.69 to 1.40)). Financial difficulty partially mediated these relationships: men who became unemployed and were worse off financially were more likely to experience psychological distress (OR 4.19 ( 95% CI 3.20 to 5.50)) than men who were not (OR 1.48 (95% CI 0.95 to 2.33)). Conversely, the beneficial health effect for people who left unemployment and became employed was confined to those who were better off financially (OR 0.34 (0.25 to 0.48) for men). Conclusions: Changes in employment status have both direct and indirect effects, through changes in financial circumstances, on subsequent psychological distress. The results support the view that the direction of causation runs from employment transitions to financial difficulties and psychological distress.