Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: Schizophrenia spectrum, bipolar, and major depressive disorders are severe mental illnesses (SMIs) that not only entail great suffering for those affected but also major societal costs. In this study, I use administrative register data to provide a detailed picture of the economic situation of people with SMI in Sweden during a period of 10 years around first-time in-patient diagnosis. First-time in-patient diagnosis was associated with a considerable drop in earnings, which was largely compensated for by social transfers: mainly sickness and disability insurance. However, there were also large and increasing pre-diagnosis earnings gaps, relative to matched comparison groups, especially among those with schizophrenia spectrum disorders. This gap was to lesser extent compensated for by social transfers. Consequently, there was a permanent and increasing – due to lost earnings growth – income differential. Hence, findings in previous studies are confirmed: even in an advanced welfare state, people with SMI – especially those with schizophrenia – have an extremely weak position on the labour market and an equally difficult financial situation.

Keywords: Schizophrenia spectrum disorder; bipolar disorder; major depressive disorder; social insurances; labour market situation

JEL-codes: I13; I14; J14; J65

Language: English

52 pages, October 19, 2022

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