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We utilized a unique dataset of Montreal residents to estimate the relationship between employment and mental health, controlling for endogeneity. We applied a maximum likelihood, simultaneous equation generalized probit model to estimate jointly the determinants of an individual's latent index of employability and their mental health as measured by the Psychiatric Symptom Index (PSI). The likelihood function was adjusted to account for the fact that individuals were sampled based on their employment status, and also for the fact that repeated observations of individuals in different periods were used in the analysis. We found tangible beneficial effects of mental health on employability. In addition, employment appears to improve mental health. The ML estimates of the endogenous relationship between employment and mental health indicate that OLS estimates are biased upwards, but the effects of unemployment on deteriorating mental health are not spurious.

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This paper investigates the surgical volume-outcome relationship for patients undergoing hip fracture surgery in Quebec between 1991 and 1993. Using a duration model with multiple destinations which accounts for observed and unobserved (by the researcher) patient characteristics, our initial estimates show that higher surgical volume is associated with a higher conditional probability of live discharge from the hospital. However, these results reflect differences between hospitals rather than differences within hospitals over time: when we also control for differences between hospitals that are fixed over time, hospitals performing more surgeries in period t + 1 than in period t experience no significant change in outcomes, as would be predicted by the 'practice makes perfect' hypothesis. The volume-outcome relationship for hip fracture patients thus appears to reflect quality differences between high and low volume hospitals.