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The Impact of Childhood Health Shocks on Parental Labor Supply

Author

Listed:
  • Tine L. Mundbjerg Eriksen

    (VIVE, The Danish Center for Social Science Research, Aarhus, Denmark)

  • Amanda Gaulke

    (Department of Economics, Kansas State University, Manhattan, Kansas)

  • Niels Skipper

    (Department of Economics and Business Economics, Aarhus University)

  • Jannet Svensson

    (Copenhagen University Hospital, Copenhagen, Denmark)

Abstract

Causal estimates of the effects of child health shocks on parental labor market outcomes are important for making efficient child disability insurance policy. We leverage the onset of type 1 diabetes (T1D) in childhood to investigate the link between child’s health and parental labor supply. We argue that T1D hits children as-if randomly because the exact cause is unknown, and it has low inheritability. T1D is characterized by a sudden, unpredictable onset, and receiving treatment is crucial to even short-term survival. Using Danish administrative registry data with quasi-experimental methods we show that mothers adjust their labor supply on the intensive margin and experience a 4-5% decrease in wage income that extends at least ten years after diagnosis. This reduction in wage income is similar in magnitude and duration to the motherhood penalty in Denmark. Maternal wage income and labor supply effects are smaller than previous estimates using disabilities that qualify for welfare, emphasizing the importance of not confounding welfare with child health. Fathers do not experience any long-term reduction in wage income.

Suggested Citation

  • Tine L. Mundbjerg Eriksen & Amanda Gaulke & Niels Skipper & Jannet Svensson, 2020. "The Impact of Childhood Health Shocks on Parental Labor Supply," Economics Working Papers 2020-02, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2020-02
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    References listed on IDEAS

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    Cited by:

    1. Clarke, Damian & Bustos, Nicolás Lillo & Tapia-­Schythe, Kathya, 2022. "Estimating Inter-Generational Returns to Medical Care: New Evidence from At­-Risk Newborns," IZA Discussion Papers 15593, Institute of Labor Economics (IZA).
    2. Amanda Gaulke, 2021. "Individual and family labor market impacts of chronic diseases," IZA World of Labor, Institute of Labor Economics (IZA), pages 482-482, January.
    3. Achyuta Adhvaryu & N. Meltem Daysal & Snaebjorn Gunnsteinsson & Teresa Molina & Herdis Steingrimsdottir, 2023. "Child Health, Parental Well-Being, and the Social Safety Net," CESifo Working Paper Series 10418, CESifo.
    4. Eriksen, Tine Louise Mundbjerg & Gaulke, Amanda & Svensson, Jannet & Skipper, Niels & Thingholm, Peter Rønø, 2023. "Childhood Health Shocks and the Intergenerational Transmission of Inequality," IZA Discussion Papers 16447, Institute of Labor Economics (IZA).
    5. Konstantin Kunze, 2022. "Public Health Insurance of Children and Parental Labor Market Outcomes," Working Papers 349, University of California, Davis, Department of Economics.
    6. Eriksen, Tine L. Mundbjerg & Gaulke, Amanda P. & Skipper, Niels & Svensson, Jannet & Thingholm, Peter, 2023. "Educational consequences of a sibling's disability: Evidence from type 1 diabetes," Economics of Education Review, Elsevier, vol. 94(C).
    7. Francisca Vargas Lopes & Pieter Bakx & Sam Harper & Bastian Ravesteijn & Tom Van Ourti, 2022. "The effects of supported housing for individuals with mental disorders," Health Economics, John Wiley & Sons, Ltd., vol. 31(S2), pages 115-133, October.

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    More about this item

    Keywords

    Parental labor supply; chronic disease; health shocks;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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