Effects of Parental Death on Youth

Abstract

Early-life shocks, such as the loss of a parent, can have lasting effects on inequality and human capital development. We study the effects of parental death during adolescence on both immediate and long-term outcomes, including education, mental health, criminal behavior, teenage pregnancy, and labor market performance. Using four decades of population-wide Danish administrative data and a difference-in-differences design with soon-to-be-treated children as controls, we provide causal evidence that parental death reduces high school graduation rates and tertiary educational enrollment while increasing the uptake of mental health treatment. Behavioral responses to parental death differ by gender: girls show an increased risk of teenage pregnancy, while boys demonstrate a higher likelihood of engaging in criminal activity. These more immediate effects lead to a long-term reduction in annual earnings. We find that living closer to grandparents, higher school quality, and a greater share of female teachers can mitigate some of these negative effects.