Mental Illness and Labour Market Outcomes: Employment and Earnings.

This paper investigates the effect of severe mental illness on the capacity to hold a job and to earn an income. We find that the employment rate is reduced with about 1/3 during the development of the disease. Hospital admission seems to stabilize employment for all diagnoses. The employment rate after hospital treatment is about 35% lower for cases than for controls and varies somewhat depending on diagnosis. On average, those who keep their jobs have 20% lower earnings compared to a control group. We use longitudinal data from labour market registers covering a 5% sample of the Danish adult population followed from 1976 to 1993 merged with data from the Central Psychiatric Case Register which covers all cases of hospitalizations with psychiatric disorders and their diagnoses since 1969. At the time of admission, we match all patients with people from the same cohort and gender. Both groups are then followed for several years before and after time of admission.