LAUSR

Abstract Societies face the challenge of providing appropriate arrangements for individuals who need living support due to their mental disorders. We estimate the effects of eligibility to the Dutch supported housing program (Beschermd Wonen), which offers a structured living environment in the community as an intermediate alternative to independent housing and inpatient care. For this, we use exogenous variation in eligibility based on conditionally random assignment of applications to assessors, and the universe of applications to supported housing in the Netherlands, linked to rich administrative data. Supported housing eligibility increases the probability of moving into supported housing and decreases the use of home care, resulting in higher total care expenditures. This increase is primarily due to the costs of supported housing, but potentially also higher consumption of curative mental health care. Supported housing eligibility reduces the total personal income and income from work. Findings do also suggest lower participation in the labor market by the individuals granted eligibility, but the labor participation of their parents increases in the long‐run. Our study highlights the trade‐offs of access to supported housing for those at the margin of eligibility, informing the design of long‐term mental health care systems around the world.