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Decomposing the effects of children's health on mother's labor supply: is it time or money?

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  • Elise Gould

    (Economic Policy Institute, Washington, USA)

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    Abstract

    In this paper, I explore how children's health influences the wages and work hours of their mother. Some children have illnesses that require expensive medicine or treatment, but demand little parental time. Others require extraordinary amounts of time; and still others require care at unpredictable times of the day. I construct a theoretical model of mother's labor supply that explicitly incorporates the financial and time costs associated with the presence of unhealthy children. The model predicts that children with time-intensive illnesses and those with unpredictable illnesses negatively influence mother's labor supply, whereas children with illnesses with a strong financial component have a positive effect on mother's labor supply. In order to empirically test this, I organize a focus group of doctors to categorize illnesses and disabilities by the type of resources they require. Using the 1997 PSID Child Development Supplement, I estimate the effects of these requirements on mother's decision to work and work hours. After controlling for the financial burden of the illness, single mothers work fewer hours if their child has a time-intensive illness and married mothers are less likely to work and work fewer hours if their child has a severe condition with an unpredictable time component. These findings are consistent with the theoretical model and highlight the need to decompose the effects of child health on mother's work status. Model specifications that aggregate across illnesses are incapable of disentangling these effects and may therefore underestimate the welfare costs of having a sick child in the family. Copyright © 2004 John Wiley & Sons, Ltd.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 13 (2004)
    Issue (Month): 6 ()
    Pages: 525-541

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    Handle: RePEc:wly:hlthec:v:13:y:2004:i:6:p:525-541

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Barzel, Yoram, 1973. "The Determination of Daily Hours and Wages," The Quarterly Journal of Economics, MIT Press, vol. 87(2), pages 220-38, May.
    2. Barbara L. Wolfe & Steven C. Hill, 1995. "The Effect of Health on the Work Effort of Single Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 42-62.
    3. Rebecca M. Blank, 1989. "The Effect of Medical Need and Medicaid on AFDC Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 54-87.
    4. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
    5. Moffitt, Robert & Wolfe, Barbara L, 1992. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 615-26, November.
    6. Moffitt, Robert, 1984. "The Estimation of a Joint Wage-Hours Labor Supply Model," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 550-66, October.
    7. B. Wolfe & S. C. Hill, . "The effect of health on the work effort of low-income single mothers," Institute for Research on Poverty Discussion Papers 979-92, University of Wisconsin Institute for Research on Poverty.
    8. Elizabeth T. Powers, 2001. "New Estimates of the Impact of Child Disability on Maternal Employment," American Economic Review, American Economic Association, vol. 91(2), pages 135-139, May.
    9. Berger, Mark C. & Fleisher, Belton M., 1984. "Husband's health and wife's labor supply," Journal of Health Economics, Elsevier, vol. 3(1), pages 63-75, April.
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    Cited by:
    1. Anette Primdal Kvist & Helena Skyt Nielsen & Marianne Simonsen, 2011. "The effects of Children’s ADHD on Parents’ Relationship Dissolution and Labor Supply," Economics Working Papers 2011-14, School of Economics and Management, University of Aarhus.
    2. Jason Fletcher & Nicole L. Hair & Barbara L. Wolfe, 2012. "Am I my Brother's Keeper? Sibling Spillover Effects: The Case of Developmental Disabilities and Externalizing Behavior," NBER Working Papers 18279, National Bureau of Economic Research, Inc.
    3. Wasi, Nada & den Berg, Bernard van & Buchmueller, Thomas C., 2012. "Heterogeneous effects of child disability on maternal labor supply: Evidence from the 2000 US Census," Labour Economics, Elsevier, vol. 19(1), pages 139-154.
    4. Marah Curtis & Hope Corman & Kelly Noonan & Nancy Reichman, 2013. "Life Shocks and Homelessness," Demography, Springer, vol. 50(6), pages 2227-2253, December.
    5. Cowling, Marc, 2007. "Still At Work? An empirical test of competing theories of long hours culture," MPRA Paper 1614, University Library of Munich, Germany.
    6. Jason Fletcher & Marsha Mailick & Jieun Song & Barbara Wolfe, 2013. "A Sibling Death in the Family: Common and Consequential," Demography, Springer, vol. 50(3), pages 803-826, June.
    7. Hope Corman & Kelly Noonan & Nancy E. Reichman, 2005. "Mother's Labor Supply in Fragile Families: The Role of Child Health," Eastern Economic Journal, Eastern Economic Association, vol. 31(4), pages 601-616, Fall.
    8. Marah A. Curtis & Hope Corman & Kelly Noonan & Nancy E. Reichman, 2012. "Life Shocks and Homelessness," Working Papers 1374, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..
    9. Morrill, Melinda Sandler, 2011. "The effects of maternal employment on the health of school-age children," Journal of Health Economics, Elsevier, vol. 30(2), pages 240-257, March.

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