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Kidney transplantation is considered a superior treatment for end-stage renal disease compared with dialysis although little is known about the wider effects, especially on labor market outcomes. The objective is to estimate the treatment effect of kidney transplantation compared with dialysis on labor market outcomes, controlling for the nonrandom selection into treatment.The average treatment effect is estimated using an inverse-probability weighting regression adjustment approach on all patients in renal replacement therapy 1995 to 2012.Kidney transplantation is associated with a treatment advantage over dialysis on employment, labor force participation, early retirement, and labor income. The probability of being employed 1 year after treatment is 21 (95% confidence interval, 16-25) percentage points higher for transplantation. The positive effect increases to 38 (95% confidence interval, 30-46) percentage points after 5 years, mainly due to worsening outcomes on dialysis. The effect on labor income is mainly mediated through employment probability. The productivity gains of transplantation compared to dialysis amounts to €33 000 over 5 years.Transplantation is superior to dialysis in terms of potential to return to work as well as in terms of labor income and risk of early retirement, after controlling for treatment selection. This positive effect increases over time after transplantation.