ABSTRACT – This paper assesses the effects of the introduction of Psychosocial Care Centers (CAPS) in Brazil on mental health. These units are the centerpiece of the Brazilian psychiatric reform, meant to deliver community-based mental health services for people with moderate or severe disorders, including substance abuse. Using a differences-in-differences design that exploits the roll-out of the CAPS across the country, we show that these centers improved access and utilization of outpatient mental health care and reduced hospital admissions due to mental and behavioral disorders. Those reductions were more pronounced for long-stay admissions and among patients with schizophrenia. We also find that the introduction of centers delivering substance abuse treatment reduced deaths caused by alcoholic liver disease. Despite these positive effects, our evidence indicates that this shift away from inpatient care increased homicide rates.

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