Abstract
The great economic crisis in 2008 has affected the welfare of the population in countries such as Italy. Although there is abundant literature on the impact of the crisis on physical health, very few studies have focused on the causal implications for mental health and health care. This paper, therefore, investigates the impact of the recent economic crisis on hospital admissions for severe mental disorder at small geographic levels in Italy and assesses whether there are heterogeneous effects across areas with distinct levels of income. We exploit 9-year (2007-2015) panel data on hospital discharges, which is merged with employment and income composition at the geographic units that share similar labour market structures. Linear and dynamic panel analysis are used to identify the causal effect of rising unemployment rate on severe mental illness admissions per 100,000 residents to account for time-invariant heterogeneity. We further create discrete income levels to identify the potential socioeconomic gradients behind this effect across areas with different economic characteristics. The results show a significant impact of higher unemployment rates on admissions for severe mental disorders after controlling for relevant economic factors, and the effects are concentrated on the most economically disadvantaged areas. The results contribute to the literature of spatio-temporal variation in the broader determinants of mental health and health care utilisation and shed light on the populations that are most susceptible to the effects of the economic crisis.