Long-term effects of job displacement on earnings and mental health: Evidence from population-wide administrative data

This paper analyzes the impacts of job displacement on earnings and mental health in Taiwan. Findings reveal an immediate 67%–68% earnings loss after displacement, with incomplete recovery after a decade. Mental health suffers in the long term, with 15%–16% more outpatient visits and 57%–62% higher medical costs. •Displacement leads to an immediate earnings loss of 67%–68% and a long-term loss of 60%–61%.•Displaced workers show a 15%–16% rise in long-term outpatient visits for mental health.•Long-term medical costs for mental illness surge by 57%–62% among displaced workers.•Lower earners, men, and older individuals suffer more pronounced mental health impacts.