Career Effects of Mental Health

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 carrylarge earnings penalties, ranging from 34 percent for depression and 38 percent for BD to 74 percentfor schizophrenia. To investigate the causal effects of mental health on a person’s career, we exploitthe approval of lithium as a maintenance treatment for BD in 1976. Baseline estimates compare careeroutcomes for people with and without access in their 20s, the typical age of onset for BD. These estimatesshow that access to treatment eliminates one third of the earnings penalty associated with BD andgreatly reduces the risks of low or no earnings. Importantly, access to treatment closes more than halfof the disability risk associated with BD.