Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272742 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16115
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
How do parents contend with threats to the health and survival of their children? Can the social safety net mitigate negative economic effects through transfers to affected families? We study these questions by combining the universe of cancer diagnoses among Danish children with register data for affected and matched unaffected families. Parental income declines substantially for 3-4 years following a child's cancer diagnosis. Fathers' incomes recover fully, but mothers' incomes remain 3% lower 12 years after diagnosis. Using a policy reform that introduced variation in the generosity of targeted safety net transfers to affected families, we show that such transfers play a crucial role in smoothing income for these households and, importantly, do not generate work disincentive effects. The pattern of results is most consistent with the idea that parents' preferences to personally provide care for their children during the critical years following a severe health shock drive changes in labor supply and income. Mental health and fertility effects are also observed but are likely not mediators for impacts on economic outcomes.
Subjects: 
child health
income
labor supply
safety net
cash transfers
disincentive effects
long-run effects
mental health
childhood cancers
Denmark
JEL: 
I10
J13
J22
Document Type: 
Working Paper

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