Income and conversion handicaps: estimating the impact of child chronic illness/disability on family income and the extra cost of child chronic illness/child disability in Ireland using a standard of living approach

Child chronic illness/ disability can present significant challenges for children, families and society that require appropriate policy responses; yet little is known about the demands placed on families resources from an economics perspective in terms of its impact on household income and the extra income required to achieve the same standard of living as families who do not have a child with a chronic illness/disability. The paper uses data from the Growing Up in Ireland National survey dataset for nine year olds. It is the first study to empirically investigate the impact of child chronic illness/disability on earnings, standard of living and the extra cost of disability together. It is also the first study to explicitly address endogeneity in the standard of living model by using a two-stage process where residuals were harvested to provide efficient estimates. The findings show that families experience significant disadvantage and economic hardship due to reduced household income and a lower standard of living due to the extra cost of disability that would require considerable income to compensate. Policy implications of these findings suggest that a tiered approach to disability support payments which encompass broader criteria for inclusion based on varying severity levels be introduced to alleviate the financial hardship and compromised economic wellbeing of families affected. In addition, more innovative policies are required to implement appropriate timely access to health and social care services and flexi parental employment, which in turn requires the provision of adequate access to high quality educational and care facilities.