Research

Recent causal work highlights the role that the start of childbearing plays in explaining the gender wage gap (e.g., Kleven et al., 2019b). Having a child with additional health needs might add unexpected time demands and monetary costs. In the United States, approximately 20% of children have special needs (HRSA: Maternal and Child Health, 2022a). Existing causal research on child health shocks in the US primarily examines acute conditions, whereas causal studies using comprehensive definitions of special needs focus on non-US settings. I build on prior work to examine how children with special needs affect parental employment, hours worked, earnings, occupation choice, and subsequent family formation decisions in the US. I exploit variation in child health status using the Panel Study of Income Dynamics (PSID) and dynamic difference-in-differences models to identify how a first child’s special needs causally affect parental outcomes. Relative to mothers of first children without special needs, mothers of first children with special needs experience declines of 6-13% and 4-11% in annual work hours and the probability of employment, respectively. This represents an additional penalty beyond the baseline child penalty experienced by all mothers. In the 4-6 years after birth, I estimate a relative decline in occupation changes for mothers of children with special needs. Fathers of children with special needs do not experience additional labor market penalties. I find no effects on marriage or migration but do find significant declines (9-12%) in subsequent fertility relative to parents of children without special needs.

Figure: The effect of having a special needs child on current parental employment

Notes: While fathers (left panel) of first children with special needs experience no significant changes to their employment, mothers (right panel) experience statistically significant and economically meaningful declines (averaging a 7% additional decline) in their employment relative to mothers of first children without special needs.

The unexpected 2013 freeze in Medicaid payments to 15 of New Mexico’s largest behavioral healthcare organizations caused a sudden, large disruption in behavioral healthcare access. Using both county-level and state-level synthetic difference-in-differences approaches, I find that New Mexico experienced substantial declines in the number of office-based mental healthcare establishments as well as employment in such establishments, particularly in rural counties. I find some evidence for declines in non-intensive outpatient substance abuse treatment admissions. I do not find evidence for changes in suicide or drug overdose death rates among the likely Medicaid-eligible population ages 25–64. However, I find statistically and economically significant increases in alcohol-related death rates in this population (an average 23% increase). These findings contribute to understanding the value of patient-behavioral healthcare provider relationships and of local behavioral healthcare access, and the impact of behavioral healthcare disruptions distinct from broader Medicaid changes.

Figure: The effect of the behavioral healthcare disruption on the number of office-based mental healthcare establishments, presented separately for urban and rural counties in New Mexico

Notes: Results are from the County Business Patterns Data. The synthetic difference-in-differences estimates suggest substantial heterogeneity in treatment effects, with the healthcare disruption generating large, negative impacts in rural counties in New Mexico relative to rural counties in other control states.