Career Effects of Mental Health

We use the approval of lithium as a maintenance treatment for bipolar disorder (BD) in Denmark in 1976 to investigate the career effects of mental health. Comparing people with and without BD, across cohorts with access to lithium at different ages and relative to people with other mental conditions, we find that access to treatment innovations increases labor market participation by 30 percent and earnings by 26 percent. These benefits operate largely through a reduction in the risk of disability, rather than through changes in occupation or educational achievement. Benefits are larger for people with less parental wealth.