Adult children experience long-lasting reductions in both earnings and employment after a parent’s death, especially after mother’s death
Because parents are typically older than their children, almost everyone will experience the loss of a parent at some point in their life. This loss most commonly occurs when children have already reached adulthood. For instance, over 95% of people in the US and Denmark experience the death of a parent after the age of 18 (US Census Bureau, Statistics Denmark). Given how common this experience is, even small effects of parental death can significantly impact the broader economy.
In our recent IZA Discussion Paper, we explore how the loss of a parent during adulthood affects the work and income of the surviving children. Despite the common occurrence of parental death, there is surprisingly little research on how it impacts adult children. In our study, we analyze data from Danish records covering the years 1980 to 2019, focusing on situations where a parent passes away unexpectedly. By comparing those who lost a parent to similar individuals who did not, we find that adult children experience long-lasting reductions in both earnings and employment after a parent’s death. Specifically, five years after the loss, men’s earnings decrease by 2%, while women’s earnings drop by nearly 3%.
The large dataset allows us to explore how the gender of both the parent and the child influences these effects. We find that the death of a mother has a more pronounced negative impact on earnings for both men and women. Moreover, women generally experience a larger drop in earnings than men after the death of either parent, contributing to gender disparities in income and employment.
We also examine the reasons behind these effects and find that both women and men experience an increase in mental health challenges after losing a parent, though in different ways. Women are more likely to seek psychological help, while men are more likely to receive prescriptions for mental health issues and opioids. Additionally, women with young children suffer an even larger drop in earnings—around 4%—likely due to the loss of informal childcare provided by the deceased parent. This factor plays a significant role in widening the gender pay gap.
While parental death is an inevitable part of life, this does not mean that its negative effects should go unaddressed by policymakers. Currently, few policies exist to support adult children dealing with the death of a parent, as this event is often managed privately without significant public intervention. Religious institutions, such as churches, typically play a role by organizing funerals. However, there is room for public, non-religious policies to help mitigate the negative impacts of losing a parent.
We suggest that offering paid leave to bereaved adult children could help them manage the immediate responsibilities following a parent’s death and provide time to mourn. Such policies could potentially reduce the long-term negative effects of parental death, though more research is needed to assess their effectiveness.
© Mathias Fjællegaard Jensen and Ning Zhang
Mathias Fjællegaard Jensen is Senior Research Fellow at the Department of Economics, University of Oxford and IZA Research Affiliate
Ning Zhang is Assistant Professor at the Chinese University of Hong Kong
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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.
Related IZA World of Labor content:
How does grandparent childcare affect labor supply? By Giulio Zanella
The economics of mental health by Richard Layard
The rise of secularism and its economic consequences by Fernando A. Lozano
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