Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208597 
Year of Publication: 
2019
Series/Report no.: 
Working paper No. 6-2019
Publisher: 
Copenhagen Business School (CBS), Department of Economics, Frederiksberg
Abstract: 
Childhood disability is a major health shock that affects parents early in their working life. We estimate its impact on parents’ career trajectories, their balance sheets, and major life decisions using detailed register data from Denmark. To identify the causal effect of childhood disability we use an event study approach, where we control for a rich set of pre-birth variables and focus on conditions that have no or weak associations with socioeconomic determinants. We find that having a child with a disability has strong negative impact on mothers’ earnings. The effect is persistent and the wage penalty appears to grow over time. Fathers’ earnings are also affected but the impact is notably smaller. We find that both parents are less likely to be employed in the long run and are less likely to ascend to top executive positions. The long-term structure of the household is also affected as subsequent fertility is lower and partnership dissolution is more common. Finally, despite this financial shock, long term net worth of families is not affected or may be positively affected, potentially due to help from government transfers and lower cost associated with having fewer other children, or due to a stronger savings motive for the long term care of the disabled child.
Subjects: 
disability
children
child
insurance
earnings
income
labor force participation
fertility
JEL: 
E24
I14
J13
J31
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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