Written by: Peter Fallesen and Rasmus Landersø

This paper studies the effects of an admission to a psychiatric hospital on subsequent psychiatric treatments, self-inflicted harm, crime, and labor market outcomes. To circumvent non-random selection into hospital admission we use a measure of hospital occupancy rates the weeks prior to a patient’s first contact with a psychiatric hospital as an instrument. Admission reduces criminal and self-harming behavior substantially in the short run, but leads to higher re-admission rates and lower labor market attachment in the long run. Effects are heterogeneous across observable and unobservable patient characteristics. We also identify positive externalities of admissions on spouses’ employment rates.