We study the short-run and long-run economic impact of
one of the largest losses that an individual can face; the death
of a child. We utilize unique merged registers on the entire
Swedish population, combining information on the date and cause of
death with parental outcomes. We exploit the longitudinal
dimension of the data and deal with a range of selection issues.
Losing a child has persistent adverse effects on labor income in
employment, on being in the labor market, and on marital status.
Even after six years, the annual income loss is about 10%. Child
loss causes 4% of those employed at the time of the child loss to
be out of work five years later, mostly due to exit out of the
labor force. Effects on hospitalization due to mental illness are
only short-term. The value of policy measures aimed at preventing
mortal accidents of children is seriously underestimated if it
does not take bereavement effects on parents into account.