Parental health shocks, and upward mobility of children’s income in China

This study examines the relationship between early parental health shocks and children’s future income upward mobility in China. We employ the timing of major acute health events to measure the parental health shocks and use CEM-PS matching to control for potential endogeneity between parental health and children’s economic outcomes. We find strong evidence of a negative effect of parental health shocks on children’s initial income levels upon entering the workforce. This effect is more pronounced for those from low-income families, families without medical insurance, and those with parents working in the non-public sector. Our results suggest that parental health shocks decrease the probability of children attaining higher education levels. We find that the impact of the father’s health shocks is more pronounced than that of mothers, and the upward mobility of female children is more affected than that of male children. This study contributes to the literature on intergenerational impacts of health shocks, human capital transfer, and coping mechanisms in developing countries.