Useful beautiful minds: An analysis of the relationship between schizophrenia and employment: Study Paper No. 44

This study paper examines the relationship between schizophrenia and employment. While most other studies have used cross-sectional data to estimate this relationship, this study uses longitudinal register data and shows the development in the employment rate of people with schizophrenia, from 15 years before the first admission to a psychiatric hospital until 10 years after this admission. The study finds a considerable drop in the employment rate for people with schizophrenia 6 years before the first hospitalization, and the employment rate stabilizes at 18% after the first admission. As family and neighborhood environments can be important factors in the development of mental illnesses and labor market outcomes, the study uses sibling-fixed effects to estimate the relationship between schizophrenia and employment. The difference in the employment rate in 2007 for the siblings with and without schizophrenia is estimated at 67%. This difference is reduced to 56% when control variables are included - such as marital status, educational achievement, and work experience - but remain unchanged when applying a sibling-fixed effect approach which controls for unobserved family specific characteristics that the siblings share.