Career Effects of Mental Health

Abstract

This paper investigates the career effects of mental health, focusing on depression, schizophrenia, and bipolar disorder (BD). Individual-level registry data from Denmark show that these disorders carry large earnings penalties, ranging from 34 percent for depression and 38 percent for BD to 74 percent for schizophrenia. To investigate the causal effects of mental health on a person’s career we exploit the approval of lithium as a maintenance treatment for BD in 1976. Baseline estimates compare career outcomes for people with and without access in their 20s, the typical age of onset for BD. These estimates show that access to treatment eliminates one third of the earnings penalty associated with BD and greatly reduces the risks of low or no earnings. Importantly, access to treatment reduces the risk of disability for a person with BD by more than half.

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

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