| 12:30 - 13:45
Institute for Fiscal Studies -
7 Ridgmount Street, London WC1E 7AE
This paper examines the labor supply responses of adult children to health shocks experienced by their elderly parents. Using detailed administrative data from Norway, we find that unexpected health shocks to elderly parents reduces the labor supply of their adult children in the short run. The effects are dependent on the nature of the shock (fatal or non-fatal), the child's gender, the number of siblings, location of the parent at the time of the shock, and whether another parent is alive at the time of the health shock. We also find that a health shock to the elderly negatively affects the mental well being of adult children, which could be an important mechanism for the observed effects. As the age distribution in many parts of the developed world skews towards the elderly, we document an important spillover on adult labor supply and well being.