What are the effects of psychological therapies on patients’ employment and earnings? In the first analysis of this question using nationally representative data, Klaudia Rzepnicka, Emma Sharland, Marta Rossa, Ted Dolby, Ekaterina Oparina, Rob Saunders, Daniel Ayoubkhani and Vahé Nafilyan show the long-term economic benefits of investing in mental health treatment.

Common mental disorders such as depression and anxiety affect not only individual wellbeing but also economic productivity. People suffering from poor mental health are more likely to be economically inactive (Organisation for Economic Co-operation and Development, 2012), face longer periods of unemployment and have lower earnings, contributing to significant costs for themselves and the national economy.

In 2019, poor mental health in England was estimated to cost £100bn (McDaid et al, 2022). This economic burden, stemming from reduced labour market participation, high staff turnover, increased sick leave and "presenteeism", underscores the urgent need for effective interventions to improve mental health.

To meet mental health needs, in 2008 the government initiated the NHS Talking Therapies (NHSTT) programme in England, then known as Improving Access to Psychological Therapies (IAPT), to offer evidence-based psychological therapies for adults with common mental disorders. The success of the service model has resulted in a growing number of countries developing similar models, tailored to local healthcare systems.

While the primary goal of NHSTT therapists is to improve people’s mental health through evidence-based treatments, it was also anticipated the programme would lead to increased productivity and improved labour market participation.

Our research uses a unique dataset created by linking national treatment programme data from NHSTT with administrative data on employment and census records in England. We provide evidence for the long-term economic benefits of these psychological therapies, showing the effects of completing NHSTT treatment on employment and earnings over the years following treatment.

Sustained improvements in employment and earnings

Overall, the study shows that completing NHSTT treatment increases average monthly earnings, with a maximum average increase of £17 in the second year after treatment. More remarkably, this effect on earnings is sustained, remaining at £10.60 more per month even six years after treatment.

The study also demonstrates a clear link between completing therapy and an increased likelihood of paid employment. We find that seven years after the start of treatment, those who have completed therapy are 1.5 percentage points more likely to be in paid employment than those who did not complete treatment. This seemingly modest percentage point increase translates into an additional 10,000 people being in work each year based on the number of people treated by NHSTT in the 2023/24 financial year.

Who benefits most?

Our study also explores how different patient groups are affected by NHSTT. Notably, people who reported being “not working, seeking work” at the beginning of therapy experience the most substantial gains. For this group, completing treatment results in a maximum average increase in pay of £63 per month by the seventh year after treatment.

Their likelihood of paid employment also peaks at a 3.1 percentage point increase in the fourth year, with this increase remaining high at 3 percentage points by year seven. This suggests that NHSTT can be particularly effective in helping the unemployed return to work. The effects on those who were "not working, not seeking work" are smaller, with a modest increase in the probability of employment but no impact on monthly earnings.

There is a clear link between completing therapy and an increased likelihood of paid employment

Age is also a factor, with the largest positive effects on employment observed for people aged 25-34 or 35-44. Individuals in these age groups have sustained increases in the probability of being in paid employment up to seven years after treatment. In contrast, completing NHSTT treatment does not appear to affect earnings of individuals aged 55-60. While older adults might experience improved mental health, this does not necessarily translate into improved long-term employment outcomes, possibly due to factors like early retirement.

The study also finds that monthly earnings for individuals who were employed at the time of referral follow a decreasing trend. This seemingly counterintuitive finding might be explained by people reducing their working hours to prioritise their mental health and avoid burnout, or moving to less demanding but perhaps lower-paying jobs that improve their overall wellbeing.

Further analyses show that achieving reliable recovery or improvement in mental health symptoms following NHSTT is strongly linked to larger and more sustained improvements in both monthly earnings and the likelihood of being in paid employment, compared with those who show no change or a deterioration in their mental health. This further highlights a clear connection between effective mental health treatment and economic gains.

Long-term benefits

The sustained improvements in employment and earnings demonstrate that investing in mental health is not just a social imperative but also a sound economic strategy. By reducing the economic burden associated with common mental disorders and increasing labour market participation, such investments can contribute to overall economic growth.

The finding that those "not working, seeking work" benefit in particular highlights the role NHSTT can play in supporting individuals back into employment, aligning with government initiatives aimed at increasing workforce participation.

Investing in talking therapies is an investment in England's long-term economic health

Earlier research, which was based on the programme’s short-term effects, found it to be cost-effective (Oparina et al, 2024). The new findings suggest that the economic benefits continue to accrue over several years without incurring additional costs - making the programme even more cost-effective.

But there are some limitations of this study: first, the definition of "completed treatment" relies on clinician reporting, which may be applied inconsistently. Second, defining individuals who left therapy earlier than the clinician intended, but may still have benefitted from their therapy, as "not treated" could have led to an underestimation of the true effectiveness of treatment.

Third, the employment data is limited to paid employees, excluding the self-employed and those with other income sources. Finally, the study is a non-randomised comparison, although sophisticated statistical methods are used to reduce bias, and this design might underestimate the labour market effects compared with randomised controlled trials (Smith et al, 2025).

Investment in talking therapies can unlock potential

This nationally representative study provides compelling evidence for the long-term economic benefits of investing in psychological therapies for common mental disorders.

The economic benefits of the Talking Therapies programme continue to accrue over several years

The sustained increases in both employment and earnings following completion of the NHSTT programme underscore the programme’s value, not only for individual wellbeing but also for the broader economy. By effectively treating common mental disorders, programmes like NHSTT can unlock individual potential, reduce economic inactivity and contribute to a more prosperous and productive society.

Policymakers could consider these findings when making decisions about the future of mental health services, such as NHSTT, to reduce the impact of common mental health disorders on the economy.

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20 June 2025     Paper Number CEPCP703

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This CentrePiece article is published under the centre's Community Wellbeing programme.

This publication comes under the following theme: Targeting policy at wellbeing