Unexpected negative health shocks of a parent may reduce adult children's labour supply via informal caregiving and stress-induced mental health problems. We link administrative data on labour market outcomes, hospitalisations and family relations for the full Dutch working age population for the years 1999-2008 to evaluate the effect of an unexpected parental hospitalisation on the probability of employment and on conditional earnings. Using an event study difference-in-differences model combined with coarsened exact matching and individual fixed effects, we find no effect of an unexpected parental hospitalisation on either employment or earnings for Dutch men and women, and neither for the full population nor for the subpopulations most likely to become caregivers. These findings suggest that the extensive public coverage of formal long-term care in the Netherlands combined with widespread acceptance of part-time work provides sufficient opportunities to deal with adverse health events of family members without having to compromise one's labour supply.

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Keywords coarsened exact matching, event study, informal care, Labour supply, Parental health shocks
Persistent URL dx.doi.org/10.1016/j.jhealeco.2019.102275, hdl.handle.net/1765/123060
Journal Journal of Health Economics
Citation
Rellstab, S. (Sara), Bakx, P.L.H, García-Gómez, M.P, & van Doorslaer, E.K.A. (2020). The kids are alright - labour market effects of unexpected parental hospitalisations in the Netherlands. Journal of Health Economics, 69. doi:10.1016/j.jhealeco.2019.102275