Childlessness and the Economic Well-being of Older Americans

IN 2006, 20.4% of women aged 40–44 years were childless by choice or because of infertility problems, compared with 17.5% in 1995 and 10.2% in 1976 (U.S. Census Bureau, 2008). For at least the next few decades, rising childlessness will be one factor that increases the ratio of older to working-age adults. As this ratio rises, either the working-age population will need to pay a larger portion of its income to support Social Security and health care for elderly people or the funding for those purposes will need to be reduced. Thus, childlessness is one contributor to the long-term financial pressures on Social Security, public health care programs, and the health care system. These macro impacts of falling fertility have received broad attention from researchers and policy makers (Feldstein, 2005; Lee & Skinner, 1999; National Research Council, 2001). In addition to its macro impacts, childlessness may have important effects on individuals. In the domain of economic status, childless adults may retire with more assets because they do not incur the costs of raising children. Greater assets, in turn, would increase the retirement income and lower the likelihood of needing income-tested benefits. Conversely, childless adults may save less because they have lower incentives to leave bequests. Similarly, childlessness may affect health status when one is older. For example, if childless adults enjoy higher consumption, including health care, when younger because a significant portion of their income was not devoted to supporting children, they may be in better health. Conversely, to the extent that children monitor their parents’ health and identify problems, although they are minor and can be treated more easily and at less cost, older parents will have better health. The policy implications of such individual effects may be significant. Suppose childless adults, on average, have poorer economic and health status than parents. Then they are likely to require greater income support, health care, and social services compared with parents. If childlessness continues to increase, financial pressures on public programs that provide income support, health and nursing home care, and social services for older Americans will be even larger than the rising ratio of elders to working-age adults alone would imply. (Wolf, 1999, makes a similar observation.) Among the most important of such programs are Medicaid, Medicare, Supplemental Security Income (SSI), public housing, and social services provided by the Older Americans Act. Innovative public programs and private initiatives may be needed to address childless elders’ needs. A more open immigration policy could reduce financial pressures by lowering the ratio of older to working-age adults. But it would not affect demand for public- and market-based caregiving services for childless elders, who have no possibility of receiving care from children. Alternatively, the childless may place fewer demands on public programs. This could occur if they have more assets, which would reduce their need for income assistance and let them pay for some health and social services that otherwise would be publicly financed. It might occur if childless adults enter their older years in better health because they could afford better health care earlier. It is possible that older persons’ demands for income support, health care, and social services are independent of parenthood status. If so, changes in the prevalence of childlessness would not affect programs’ costs and caseloads. The subject of this study is the relationship between childlessness and older Americans’ income and wealth—two core indicators of economic well-being. The study provides the first evidence on this relationship for men. Just one prior study, Johnson and Favreault (2004), examines differences in these indicators between older mothers and childless women. Unlike prior research on economic, psychological, or any other social impacts of childlessness, the current study compares findings from four statistical estimators: standard OLS and logit, OLS and logit random effects, quantile regression, and propensity score models. The findings are a useful starting point for understanding the economic consequences of childlessness and, as childlessness becomes more prevalent, the policy importance of such consequences, keeping in mind the important limitations of these findings, such as defining childlessness in biological terms and, hence, not considering the consequences of step and adopted children.