Prenatal Conditions and Midlife Mental Health: Evidence from an Alcohol Policy Experiment

We estimate the long-term mental health impact of an alcohol policy experiment on individuals exposed to the policy in utero. The policy lasted for 8.5 months and significantly expanded access to alcohol, especially for those under age 21. Using administrative data on healthcare visits, drug prescriptions, and psychological assessments, we show that prenatal policy exposure had a substantial, early, and persistent impact on the mental health of the children of young mothers. The exposed cohorts conceived just before the policy started are 16% more likely to be diagnosed with any mental condition in midlife. We find effects on common midlife conditions such as depression and anxiety, on the ability to cope with psychologically stressful situations at age 18, and on neurodevelopmental disorders that manifest in early childhood. The impact of the policy on midlife earnings is significantly lower among individuals with predicted mental health care needs who reside in areas with lower barriers to accessing mental health care. Overall, our findings indicate that policies increasing access to mental health treatments could substantially improve labor market outcomes, even for conditions with early-life origins.