Persistent or Provisionary: Examining the Effect of early life parental health shocks on children’s educational attainment, financial behavior, and mental health

• In Event: Long-Run Effects of Health and Place-Based Policies

Abstract

How do parental health shocks experiences during adolescence influence children’s long-term life trajectories? In this paper, we examine this question by focusing on three distinct, yet interlinked, dimensions: educational attainment, financial behavior, and mental health. Using the intergenerational feature of the Panel Study of Income Dynamics, we link parental reports of work-limiting disabilities across a 53-year panel (1968 – 2021 waves) to outcomes of adult children (1999 – 2021 waves) in the United States. To assess the extent to which age at which life shock experience affects children’s trajectories, we distinguish between parental health shocks occurring during early teen (ages 11 – 14) and late teen (ages 15 – 18). More specifically, we evaluate how the onset of a parental disability during these critical developmental periods transmits to children’s life trajectories across the three focal domains. Preliminary results indicate that adolescents exposed to parental health shocks — particularly during the late teen years — are more likely to attain lower levels of education, are less likely to engage in regular saving behavior, and report worse mental health outcomes in early adulthood. We plan to explore whether a subset of adolescents may respond to early adversity by developing stronger future-oriented financial attitudes, such as increased emphasis on planning and saving for future education, that is potentially and positively associated with saving behavior in adulthood.

Authors

• Hyeran Chung, hchung4@utep.edu

• Manita Rao, AARP