When a child falls seriously ill, the ripple effects go far beyond the hospital. For working parents—especially mothers—a sudden health crisis like a cancer diagnosis can upend careers, strain finances, and widen long-standing gender gaps in the labor market. A recent IZA discussion paper by Peyman Firouzi Naeim, David W. Johnston, and Maryam Naghsh Nejad explores this underexamined yet critically important issue: how do workplaces influence the extent to which caregiving shocks affect mothers’ jobs and incomes?
Using detailed administrative data from Australia, the researchers trace the employment and earnings outcomes of parents whose children are diagnosed with cancer. This rare but severe caregiving shock provides a unique lens through which to examine how workplace environments can either cushion or intensify the economic fallout. The findings offer powerful insights for policymakers, employers, and advocates interested in improving gender equity and caregiving support in the workforce.
Why this matters
While the effects of childbirth on women’s careers are well known, less attention has been paid to caregiving responsibilities that arise later in childhood. These episodes—often sudden and intense—can force parents to step back from paid work to care for their child, with long-term consequences for their earnings and career progression. Mothers are disproportionately affected, both because they tend to be the primary caregivers and because workplace structures often do little to accommodate these demands.
The researchers’ work sheds light on how much workplace characteristics matter in this context. By analyzing factors such as the prevalence of long working hours, the presence of women in leadership roles, and gender pay gaps across firms, occupations, and industries, they examine how workplace norms and structures influence the economic consequences of caregiving.
What the researchers did
The authors used population-wide data linking tax, welfare, and health records to follow the careers of nearly all parents in Australia whose children were diagnosed with cancer. This comprehensive dataset includes matched employer-employee records, allowing them to map out the workplace environments in which these parents were employed.
To identify the causal impact of caregiving, the researchers used a dynamic difference-in-differences approach. They compared parents of children recently diagnosed with cancer to those whose children will face a similar diagnosis in the future. This method allows them to control for family-specific characteristics and isolate the effect of the caregiving shock itself.
What they found
The effects on mothers are striking and persistent. In the year a child begins cancer treatment, maternal earnings drop by 15%. Even three years later, earnings remain nearly 10% lower than they would have been without the diagnosis. Notably, there is no similar impact on fathers’ earnings, reinforcing the gendered nature of caregiving responsibilities.
Workplace characteristics play a major role in shaping these outcomes. Mothers employed in firms or occupations with long average work hours experience larger earnings losses. In contrast, workplaces with more women in senior roles—especially at the firm level—are associated with smaller declines in maternal earnings. These results suggest that more flexible or supportive work environments can help mothers better balance caregiving with paid work.
Why workplace design matters
The findings suggest that workplace policies and cultures can significantly influence how families navigate serious caregiving demands. In particular, long-hour work cultures and limited representation of women in leadership appear to make it harder for mothers to stay engaged in the labor market during these shocks. Conversely, workplaces that offer flexibility and have more gender-equitable leadership structures may allow mothers to maintain employment and earnings more effectively. These environments likely reflect broader organizational support for caregiving, including formal policies (like leave or flexible schedules) and informal norms that shape how caregiving is viewed and accommodated.
Policy implications
The authors offer the following policy recommendations:
- Supportive Work Environments Matter: Policymakers should encourage workplace flexibility and gender-inclusive leadership as part of broader efforts to improve labor market equity. Incentives or standards for caregiving-friendly practices could help reduce the economic penalties faced by working mothers.
- Caregiving Leave Should Extend Beyond Early Parenthood: While many parental leave policies focus on the early years of a child’s life, these results highlight the need for support mechanisms that also address caregiving demands later in childhood—especially in cases of serious illness.
- Targeted Income Support May Be Needed: Even in countries with robust health systems and social safety nets, families often bear long-term economic burdens when a child becomes seriously ill. Earnings losses that persist for years suggest a potential role for more generous or better-targeted income replacement during caregiving shocks.
- Reducing Gender Gaps Requires Structural Change: The persistent earnings penalties for mothers underscore how gender inequality in the workplace is reinforced through caregiving demands. Addressing these disparities requires not only individual accommodations but systemic change in how work is structured and rewarded.
Looking ahead
As populations age and dual-earner households become the norm, the ability to balance caregiving with employment will only grow in importance. This study offers a data-driven look at one extreme but illustrative case: childhood cancer. The lessons apply more broadly to other caregiving scenarios—whether for children with chronic conditions, aging parents, or partners with disabilities.