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Psychiatric hospital admission and later crime, mental health, and labor market outcomes

Rasmus Landersø and Peter Fallesen

Health Economics, 2021, vol. 30, issue 1, 165-179

Abstract: Most OECD countries have downsized treatment capacity at psychiatric hospitals substantially. We investigate consequences of these reductions by studying how the decision whether to admit individuals in mental distress to a psychiatric hospital affects their subsequent crime, treatment trajectories, and labor market outcomes. To circumvent nonrandom selection into admission, we use a proxy of occupancy rates prior to a patient's first contact with a psychiatric hospital as an instrument. We find that admissions reduce criminal behavior, likely due to incapacitation, and predominantly for males and those with a criminal record. Furthermore, admission lowers patients' subsequent labor market attachment, likely because a psychiatric hospital admission is an eligibility criterion for welfare benefits.

Date: 2021
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