The Impact of Children’s Disabilities on Families

In this paper we investigate the impact of having a child with a severe disability on parents’ trajectory of earnings, employment, marital dissolutions and subsequent fertility. We construct a database of the universe of births in Denmark in 1992-2005 that links together several administrative registers including detailed health records and data from tax authorities and employers. To estimate the causal effect we focus on serious conditions (based on US Social Security rules) that appear relatively randomly in the population and apply an event study framework using both regression and matching methods. We find that the earnings trajectories for affected and unaffected families begin to diverge about 4-5 years after the birth of their child, leading to a significant long term impact on both mothers’ and fathers’ earnings. By 11-15 years after the birth of the child, affected mothers earn 8-9% less, and affected fathers 5-6%, compared to unaffected parents. Having a child with disability furthermore decreases the number of subsequent births by 11-14%. For further insight, we isolate the impact of having a child with cerebral palsy, a relatively common disability that is not part of our main definition, and find comparable results.