Activating the long-term inactive: Labor market and mental health effects

In many Western countries, a sizeable group of people live on welfare benefits for a long time. Many of them suffer from mental health issues. This paper studies the labor market and mental health effects of an activation program targeting these long-term inactive people. We exploit the staggered implementation of the program in a difference-in-differences design. We find that the activation program does not affect labor market outcomes of men and women. However, among men who were on mental health medication prior to the start of the program, we find a substantial drop in mental health drug prescriptions in the years following the start of the program. •People who live on welfare benefits for a long time often face mental health issues.•We study an activation program for this group.•The program was implemented in a staggered manner.•It lowers mental health medication prescribed to men with prescriptions at baseline.•There are no effects on labor market outcomes.