We explore mental health as a potential mechanism to explain the labor market penalty of an early-onset physical disability using administrative data from Sweden. For methodological reasons, we focus on persons with Cerebral Palsy (CP) and use prescriptions for mental health conditions. We examine how much of the differences in labor market outcomes is explained by prescriptions for mental health conditions and whether the mental health gradient differs between persons with and without CP. Finally, we assess whether the social insurance system compensates for potential lost earnings due to mental health through access to social benefits. We find that prescriptions for mental health conditions explain only a small part of the labor market penalties of CP. While mental health may impose additional employment penalties, labor market benefits exist for the treatment of mental health conditions among persons with CP. Furthermore, we find that the social insurance system partially compensates for the earnings penalties of CP through access to social benefits. Our results underscore the importance of understanding the interactions between mental health and labor market outcomes of persons with motor disabilities.
Asuman et al. (Thu,) studied this question.