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If you have a noticeable gap in employment dates but don't explain it on your resume, many recruiters will either just discard your resume and move on to next one, or come up with their own theory about why you weren't working. Although you might still be considered for job, recruiter's (probably false and somewhat subconscious) story about why you weren't working could put you at a disadvantage in their mind compared to other candidates they're considering.
If you had a medical condition that has since been resolved completely or nearly completely, my sense is you're better off explaining that briefly on resume instead of not mentioning anything at all. For example: Dec 2002 to Nov 2004: Took sabbatical from work to deal with a medical problem. The issue has been completely resolved and doctors feel it will not reoccur.
If it's a minor problem that most people could understand, like a problem with back pain, you could even bring it up in interview. An employer might not feel comfortable bringing up subject - especially because if they asked about it, it could look like they were discriminating against you illegally - but if you think you can make them feel more comfortable with fact that problem has been solved by explaining it, you could give it a try. The biggest concern an employer will have about a gap in employment is whether it is any indication of your likely future performance.
If it was a medical problem, they could be concerned that it could happen again and that they'd be stuck with having to find a replacement for you. If you don't provide any explanation, employer might think you couldn't find a job and were unemployed because your skills were not up to par.
I would recommend leaving out psychological aspect since psychological illnesses are rarely understood by general public.
Another alternative would be if you did some other things during your time off which could be mentioned while leaving out part about medical condition. For example, if you spent more time with your kids, you could put down:
Dec 2002 to Present: Left work to spend more time with children. Children are now older and I'm ready to return to workforce.
The bottom line is you're best off having some kind of story to tell that employer will find palatable. You don't want to tell an outright lie, but you may want to emphasize certain things more than others depending on what you find gets most favorable response (in terms of replies to resumes and in interviews).
Scott Brown is the author of the Job Search Handbook (http://www.JobSearchHandbook.com). As editor of the HireSites.com weekly newsletter on job searching, Scott has written many articles on the subject. He wrote the Job Search Handbook to provide job seekers with a complete yet easy to use guide to finding a job effectively.