Career Effects of Mental Health

Abstract

One in twelve Americans is affected by a mental health disorder. This paper examines the effects of such disorders and treatment, using individual-level registry data on mental health diagnoses. We find that mental health conditions carry immense earnings penalties: Compared with the population, people with depression earn 35 percent less, people with bipolar disorder earn 38 percent less, and people with schizophrenia earn a full 74 percent less. These results hold when we compare people with a disorder to their siblings, controlling for a person’s family background. People with mental health disorders also face substantially higher risks of zero earnings and disability. To investigate the causal effects of mental health, we examine the approval of lithium as a treatment for bipolar disorder (BD) in 1976. Baseline estimates compare career outcomes for people with and without access to treatment in their early 20s, the typical age of onset for BD. We find that access to treatment eliminates one third of the earnings penalty from BD. Moreover, it reduces the risk of zero earnings by more than one third, and it reduces the risk of disability by nearly two thirds. Notably, both the costs of mental health disorders and the benefits from treatments are concentrated in the bottom quantiles of earnings.

Keywords: Mental Health, Bipolar Disorder, Depression, Schizophrenia, Earnings, Entrepreneurshio, Disability

JEL Classification: M13, J23, J24, O31, I12