Do Medical Treatments Work for Work? Evidence from Breast Cancer Patients

We investigate the effects of radiation therapy on the mortality and economic outcomes of breast cancer patients. We implement a 2SLS strategy within a difference-in-difference framework exploiting variation in treatment stemming from a medical guideline change in Denmark. We reproduce the results from an RCT showing the lifesaving benefits of radiotherapy. We show radiation therapy also has economic returns: Ten years after diagnosis, treatment increases employment by 37 percent and earnings by 45 percent. Previous work has documented a substantial employment drop after a breast cancer diagnosis. Our results imply that radiation therapy can reduce this effect by 70 percent. (JEL H51, I12, I18, J16, J22, J31)