Career Effects of Mental Health: Evidence from an Innovation in Treating Bipolar Disorder

We use the approval of lithium as 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 that gained access to lithium at different ages and relative to siblings with other conditions, we find that access to treatment innovations increases labor market participation by 22 percent and earnings by 20 percent among people with BD.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.