Hidden Costs, Time Lost: The Effects of Adverse Parental Health Shocks on Young Adult Labor Outcomes

Abstract

As life expectancy increases, individuals are living longer with chronic diseases and disabilities. Their children, most of whom are of prime working-age, are in part responsible for providing financial, physical, and emotional support. In this paper, I explore the impacts of negative parental health shocks (i.e., the diagnosis of a parent with cancer or cardiovascular disease) on the offspring’s labor market outcomes (i.e., the probability of employment, weekly hours worked, and annual income). To determine the true effect on these labor outcomes, I utilize data from two of the United States’ National Longitudinal Surveys (NLS). I run fixed effects regressions with panel data and conduct event studies to analyze the outcomes, as there is currently no literature on the relationship between parental health and young adult labor outcomes in the United States. I show that severe, adverse parental health shocks for working-age adults have little to no significant effect on labor market outcomes. Following a negative parental health shock, adults are less likely to be employed, especially if the shock is a diagnosis of cardiovascular disease. Once I account for the age of the individual, this effect on employment loses its significance. Furthermore, after an adverse parental health event, the individual is likely to work fewer hours and receive less income than before, but these results are not statistically significant at any level, so I cannot conclude with reasonable certainty that any effect exists on hours worked or income for the United States population as an aggregate. I do find, however, that the effects on weekly hours worked and employment status are statistically significant and vary depending on gender, race/ethnicity, and educational level.