What Determines Local Expenditures on Mental Health Care in Sweden Really?

The objective of this paper is to analyze the determinants of local expenditures on mental health care in Sweden. We use a unique dataset that identifies the localities’ expenditures explicitly directed towards mental health care. Based on these data we find that there is increasing returns to scale in the provision of local mental health services in terms of population. However, it appears as if local policy variables, local earnings potential (economic opportunities), geographical area or other indicators that have been put forward in the debate, cannot explain the large variation in local expenditures on mental health care in