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Seminar  |  11/22/2017  |  12:00 PM

Brown Bag Seminar: Career Effects of Mental Health

12:00 - 1:30 p.m., Michael Dahl (Aarhus University)

Max Planck Institute for Innovation and Competition, Munich, Room 313

This paper investigates how a major mental disorder - bipolar disorder - affects people’s careers. Individual-level registry data for the population of Denmark allows us examine variation in mental health diagnoses, prescriptions, and earnings for 2.5 million people born between 1946 and 1975. These data show that people with bipolar disorder earn 32 percent less than the overall population and 36 percent less than their siblings. To examine the effects of mental health treatments, we exploit the introduction of lithium as a targeted treatment for bipolar disorder in 1976. Baseline difference-in-differences regressions compare career penalties of mental disorder for people who had access to treatment when they turned 20 with people who did not have access. OLS estimates indicate that access to treatment led to a 30 percent reduction in the earnings penalty (from 32 to 22 percent). A major policy concern is that mental health disorders – and differential access to treatment – may exacerbate inequality. To investigate this issue, we estimate differential effects of bipolar disorder and access to treatment across the earnings distribution. This analysis reveals a dramatic differential effect of mental health – and treatments – on low end of the earnings distribution. In the lowest 10 percent of the earnings distribution, people with bipolar disorder earn 82 percent less than the overall population. Access to treatment closes this gap almost completely, by 89 percent (from 82 to 73 percent).

Contact Person: Zhaoxin Pu