Parent’s Long-Term Care Needs and Economic Status of Adult Children

by Kanika Arora, Syracuse University

The empirical work over the last few decades suggests that long-term care needs of an elderly parent may lead to negative financial consequences for their adult children. However, the bulk of the literature in this field approaches the topic by examining the impact of informal caregiving on wages and work behavior. Other studies that focus on broader measures of monetary costs limit their samples to only those adult children who provide informal care to their parent. This paper strives to fill the gap in the literature. Specifically, it aims to identify the relationship between onset of dementia among elderly parents and change in wealth of their adult children (regardless of their status as informal caregivers). Longitudinal data from seven waves (1998-2010) of the Health and Retirement Study are used to analyze this question. Preliminary results from quantile regressions find that a new parental health condition (in this case, dementia) reduces household wealth of an adult child by a large amount in the upper quantiles of the wealth change distribution. Future analyses will be aimed at analyzing the mechanisms through which household wealth is influenced and whether reduction in wealth is temporary or long lasting.

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