Objective: Schizophrenia patients pose a substantial burden in terms of indirect costs, much of which is attributable to loss of employment. We present a new approach to assess the cost-effectiveness (CE) of risperidone vs. haloperidol using employability as an outcome measure. Methods: A decision analytic CE model was developed to compare the two treatments over a 1-year period including all direct medical costs and the number of employable persons as a measure of effectiveness. A measure of executive functioning, the Wisconsin Card Sorting Test Category score (WCST-Cat score), was used as an intermediate endpoint from which employability was modeled. A Monte Carlo procedure, using WCST-Cat score sampling distributions from clinical trials, simulated the WCST-Cat score distribution for a cohort of 10,000 patients. A clinically stable patient, with a Positive and Negative Syndrome Scale (PANSS) score increase of at least 20% and a WCST-Cat score of >=3.5 was assumed to be employable. Sensitivity analysis was performed for key values. Results: The base case per-patient cost of risperidone and haloperidol was US$6422 and US$4989, respectively, and the number of employable persons was 3258 (32.58%) and 2517 (25.17%), respectively, which translates to an incremental CE ratio of US$19,609 per employable person for risperidone. Risperidone remained cost increasing and had higher number of employable persons over all the ranges used in the sensitivity analysis. The incremental CE ratio ranged from a high of US$1,000,000 to a low of US$3000 per employable persons when the rates of clinical stability for risperidone and haloperidol therapy were varied. Conclusion: Gains from earning rates for employed persons with schizophrenia, savings in informal caregiver costs and other human benefits could justify an incremental cost of US$19,609 for each additional employable person prescribed risperidone.