Mental disorders and lifetime earnings (November 2021, previous version May 2021)

Abstract

<p>Mental well-being of adolescents and young adults is gaining increased amount of attention. Yet little is known about lifetime labor market costs attributable to mental disorders nor the related heterogeneity by the age of onset of psychiatric conditions. This paper contributes by documenting the lifetime labor market performance deficits related to severe mental health-related problems. Using longitudinal socio-economic and health register data with a 50-year follow-up, I document that psychiatric admission history is associated with substantial losses in labor market performance which amount to 41% relative to control group. Age of first admission matters: having the first admission one year earlier than the affected controls is associated with 1% loss in lifetime earnings. Overall, results provide an economic rationale for early intervention in mental illnesses as deficits in the labor market are larger, the earlier first psychiatric admissions emerge.<br></p>