The Effect of Family Health Shocks on Children's Economic Hardship: The Case of Homelessness

Marah A. Curtis, Boston University
Hope Corman, Rider University and National Bureau of Economic Research (NBER)
Kelly Noonan, Rider University and National Bureau of Economic Research (NBER)
Nancy E. Reichman, Robert Wood Johnson Medical School

Although economic hardship may lead to health problems, it is also possible that having a family member in poor health can lead to economic hardship. Hardship may result when there is less time, fewer financial resources, and dimished capacity to manage. We exploit an exogenous health shock—the birth of a child with a severe health condition—to investigate the causal effect of a health shock on homelessness. We find that the shock increases the likelihood of homelessness during the child’s first 5 years, particularly in cities with high housing costs, states with weak public assistance safety nets, and among individuals in poor neighborhoods. Our results confirm that hardship and health problems can have causal effects in both directions, and imply that children in households that experience health shocks are more prone to experiencing economic hardships.