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Aims: Psychotherapy is a widely used treatment for mental disorders, but whether it also improves employment and other labour market outcomes remains inconclusive. This study examined the effectiveness of a nationwide subsidized psychotherapy programme using extensive register-based data. Methods: The sample consisted of individuals who applied for rehabilitative psychotherapy in Finland in 2009–2012 ( n = 35,083). Prior to 2011, some applications were rejected due to the limited budget that the central government provided for the programme. From 2011, all eligible applicants were granted rehabilitation. We used propensity score matching to create balanced samples of those who received a negative decision in 2009–2010 ( n = 2047) and those who were granted rehabilitative psychotherapy in 2011–2012 ( n = 12,046) in terms of their sociodemographic background characteristics, prior labour market attachment and health status. Results: We found that compared to the applicants who were not accepted to the programme, the granted applicants with similar background characteristics had, on average, a six-percentage-point higher employment rate, €2100 higher annual earnings and a six-percentage-point lower probability of becoming a disability benefit recipient five years after their first application. Further sensitivity analyses confirmed that these results were not biased, for example, by differences in macroeconomic conditions during the follow-up. Conclusions: Quasi-experimental research design showed that rehabilitative psychotherapy was significantly associated with better labour market outcomes. Although several relevant background factors were included in the matching analysis, it is possible that some unobserved factors explain both access to psychotherapy and subsequent labour market outcomes.

acquiring the data. We wish to thank various participants in seminars and conferences who have commented on the paper. In particular, we thank Roope Uusitalo and Satu Nivalainen. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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