How Does the Death of a Parent Affect the Labor Market Outcomes of Adult Children?

Jensen and Zhang (2024) study whether the death of a parent affects the labor market outcomes of adult children. They ask whether parental loss leads to changes in earnings, employment, or work behavior. They analyze large administrative data linking Danish adults to their parents, tracking employment and earnings before and after a parent’s death. They find that parental death causes measurable declines in labor market performance. Adult children experience short-term earnings losses and reduced employment, with effects concentrated in the first few years after the loss. The estimated effects suggest earnings fall by roughly 2–4 percent following a parent’s death, indicating meaningful economic consequences of bereavement.

Why This Article Was Selected for The Policy Scientist

Jensen and Zhang’s study addresses an issue that extends well beyond the immediate labor market consequences of bereavement. The death of a parent is a common life event with potential implications for workforce participation, productivity, and long-term economic stability. Understanding these effects has clear relevance for labor policy, family leave provisions, and employer practices in aging societies where adult caregiving and intergenerational ties remain strong. Jensen and Zhang have produced several studies examining the economic consequences of family shocks, and this article contributes to that growing body of work. The Danish administrative data used here are unusually comprehensive and reliable, though the institutional context may limit direct generalization to countries with weaker social insurance systems. The empirical strategy relies on observational variation rather than experimental design. While the methods are carefully executed, future research employing stronger causal inference designs would further strengthen confidence in the estimated effects.

Full Citation and Link to Article

Jensen, M. F., & Zhang, N. (forthcoming). Effects of parental death on labor market outcomes. American Economic Review. https://doi.org/10.1257/aer.20240432 

Central Research Question

Jensen and Zhang examine how the death of a parent affects the labor market outcomes of adult children. While a large literature studies the effects of family disruptions during childhood, far less attention has been given to economic consequences that occur when parental loss happens later in life. The authors therefore ask whether parental death leads to measurable changes in employment, earnings, and labor supply among working-age adults. More specifically, they investigate whether bereavement reduces labor market participation, lowers earnings, or alters work patterns in the years following a parent’s death. The study also considers whether these effects differ depending on which parent dies and whether the adult child had strong preexisting labor market attachment. By focusing on adult outcomes, the paper addresses an important gap in the literature on family shocks and economic behavior. The research question is therefore both descriptive and causal: does parental death produce a measurable decline in labor market performance among adult children, and if so, how large and persistent are those effects?

Previous Literature

The paper builds on several strands of prior research examining how major life events influence economic outcomes. A large body of scholarship has documented the long-term consequences of parental death or family disruption during childhood. These studies generally find substantial effects on educational attainment, mental health, and lifetime earnings. However, that literature largely concentrates on early-life exposure to parental loss. Comparatively little research has examined whether parental death later in life affects adult economic behavior.

Another relevant body of work analyzes the economic consequences of bereavement and other family shocks among adults. Studies in this area have shown that events such as divorce, illness, and caregiving responsibilities can affect labor supply, productivity, and earnings. Parental death may operate through similar channels, including emotional distress, caregiving obligations prior to death, or the administrative and financial burdens associated with estate management.

Jensen and Zhang extend this literature by focusing specifically on parental loss among working-age adults. Their contribution is to examine how bereavement affects labor market performance using large administrative datasets that allow precise measurement of employment and earnings over time. In doing so, they complement earlier studies that emphasize childhood exposure to parental death and broaden the scope of research on how family shocks influence economic outcomes.

Data

The study relies on comprehensive administrative data from Denmark that link individuals to their parents and track labor market outcomes over time. These population-level registers include detailed information on earnings, employment status, demographic characteristics, and family relationships. Because the data cover the entire population, they provide unusually accurate measurement of labor market activity and minimize common sources of reporting error that appear in survey datasets.

The authors observe adult children before and after the death of a parent, allowing them to construct longitudinal measures of labor market performance. Earnings records come from official tax registers, ensuring precise measurement of income and employment status across years. The dataset also includes information on the timing of parental death, which enables the authors to examine changes in labor market outcomes relative to that event.

One of the strengths of these administrative data is their scale and completeness. The dataset includes very large numbers of individuals observed across multiple years, providing substantial statistical power to detect even modest changes in labor market outcomes. The ability to link parents and adult children is particularly valuable, as it allows the researchers to identify the precise timing of parental loss and track its economic consequences. While the Danish institutional setting provides high-quality data, it also reflects a specific welfare state context that may influence how family shocks affect labor markets.

Methods

Jensen and Zhang employ an empirical strategy that compares labor market outcomes before and after parental death. The authors exploit variation in the timing of parental death across individuals to estimate how employment and earnings change following bereavement. By observing individuals across multiple years surrounding the event, they can evaluate both short-term and medium-term effects.

The analysis uses longitudinal regression models that control for individual characteristics and time trends. These models incorporate fixed effects that account for unobserved individual traits that remain constant over time. By comparing each individual’s outcomes before and after the death of a parent, the authors reduce the influence of stable personal characteristics that might otherwise bias the estimates.

The empirical approach therefore resembles an event-study framework in which labor market outcomes are measured relative to the timing of parental death. This method allows the authors to track the dynamic trajectory of earnings and employment in the years surrounding the event. While the strategy provides a structured way to analyze temporal changes, it relies on observational variation rather than experimental or quasi-experimental identification. As a result, the estimates should be interpreted as careful observational associations rather than the results of randomized interventions.

Findings/Size Effects

The results indicate that parental death produces measurable declines in the labor market performance of adult children. The effects appear relatively soon after the event and are concentrated in the first few years following bereavement. On average, adult children experience reductions in earnings and modest declines in employment.

The estimated magnitude of the earnings effect is modest but clearly detectable in the data. The authors report that earnings fall by approximately two to four percent following the death of a parent. These declines occur even among individuals who were previously well attached to the labor market. The results suggest that bereavement can temporarily disrupt economic activity even among adults with stable employment histories.

The employment results follow a similar pattern. Labor market participation declines slightly after parental death, indicating that some individuals temporarily reduce their work activity. The effect appears to be short-lived for most workers, with labor market outcomes gradually recovering over time.

The authors also explore whether the effects differ depending on whether the deceased parent is the mother or the father. In some specifications, the death of a mother appears to produce slightly larger labor market effects than the death of a father. This difference may reflect variations in caregiving relationships or emotional attachment. However, the overall pattern remains consistent across both cases: parental death leads to modest but measurable disruptions in labor market outcomes.

These findings highlight the economic consequences of bereavement in adulthood. Although the estimated effects are not extremely large, they are statistically detectable and persist long enough to influence short-term earnings trajectories.

Conclusion

Jensen and Zhang’s study provides evidence that the death of a parent can influence the labor market outcomes of adult children. Using comprehensive administrative data from Denmark, the authors show that bereavement is associated with measurable declines in earnings and modest reductions in employment in the years immediately following parental death. These effects appear relatively quickly and gradually diminish over time.

The paper contributes to the literature on family shocks and economic behavior by extending analysis beyond childhood exposure to parental loss. Instead, it demonstrates that parental death later in life can also affect economic activity among working-age adults. The use of large administrative datasets allows the authors to measure labor market outcomes with considerable precision and track changes over time.

At the same time, the empirical strategy relies on observational comparisons rather than experimental or quasi-experimental identification. While the methods are carefully implemented, future research that employs stronger causal inference strategies could further clarify the mechanisms underlying these labor market effects. Overall, the study provides new evidence that major family events can influence economic behavior even well into adulthood.