Talk Therapy and Human Capital in Adolescence: Evidence from Nepal

We examine the impact of a randomized therapy intervention on Nepali adolescents at risk of school dropout. Our study is the largest of its kind (N = 1,707) and is novel in that participation does not require a preexisting diagnosis. Ninety percent of those offered therapy participated, with younger adolescents demonstrating higher compliance. Among those who complied, therapy significantly reduced psychological distress, improved emotional regulation, and enhanced life perspective, even in individuals without baseline mental health issues. However, these improvements in well-being did not lead to increased school attendance or better cognitive performance, suggesting that additional interventions may be necessary to enhance educational engagement in low-resource settings.