Does Socioeconomic status mediate the relationship between income loss and depression scores? Evidence from South Africa

This paper examines the role of socioeconomic status (SES) in mediating the effect of job and household income loss on mental health during the COVID-19 pandemic. We note that even though job loss will invariably reduce household income, the relationship between these factors and mental health may be mediated by SES. Specifically, in the context of COVID-19 induced shock, job loss may not be a threat to survival for an individual with relatively high SES, while this is not the case for individuals with low SES. Our empirical analysis uses threshold regression under the assumption that the relationship between depressive symptoms and pandemic induced job/ income loss has a threshold effect. We find that job loss (but not the decline in household income) is a stronger predictor of poor mental health for individuals that live in households above a certain SES threshold. This suggests that the psychological trauma of job loss due to loss of identity and purpose outweighs the financial loss for individuals with higher SES. On the other hand, a decrease in household income (as against the loss of individual income) is a stronger predictor of poor mental health for individuals with lower SES. We argue that these findings are related to high-income inequality in South Africa. The results highlight the different implications of job loss and income loss for depressive symptoms in the context of high socioeconomic inequality.