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.
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