Child Disability and Parental Labor Supply
with Rafael Latham-Proença, Marcela Mello and Joana Silva
Abstract
Having a child with a severe congenital disability deeply impacts family life, yet evidence on the economic effects remains limited. This paper examines the impact of a child health shock causing lifelong disability on household labor market outcomes in Brazil. Using an exogenous shock to disability incidence, the Zika virus epidemic, which caused a surge of microcephaly cases in children, we find that mothers of affected children reduce labor force participation, including informal work. The shock makes the motherhood penalty 75% larger (a 12.0 p.p. reduction compared to 6.8 p.p. in controls). Informality does not seem to serve as a buffer, as informal employment is reduced by an additional 20 p.p. (50%). Brazil's disability payment system supplements income but intensifies maternal employment losses. Results suggest that child health shocks have persistent economic impacts beyond immediate health conditions and that, in developing countries, informality and welfare programs shape these impacts.
Main result
