Household Income Lowers When One Spouse is Diagnosed with Cancer

The negative impact a cancer diagnosis has on a patient and their family runs deep, from mental and emotional health to financial stability. The financial burden cancer comes as no surprise, as findings from a recent study show that caring for a spouse with cancer significantly reduces family income.

In a study published in the Journal of Health Economics, investigators tracked changes in employment and income among working couples in Canada.

After matching tax returns with health data, the investigators found that a spousal cancer diagnosis resulted in a decline in household income by an average of 5% among men and 9% among women.

“The average annual household income for the working-age couples we studied was about $100,000, so the loss of income per family is about $5000 to $9000, which is a pretty substantial decline,” said co-investigator Vincent Pohl. “In a situation where one household member has a devastating diagnosis, it leads to the whole household suffering economically.”

The culprit for this loss of income is what’s known as the caregiver effect, in which 1 family member reduces their own employment to support another.

“We though that the household’s lessened income could happen in 1 of 2 ways,” Pohl said. “One is that the person who is diagnosed might not be able to work because they are getting treatment or they’re too sick to work.

“The second is what happens to their spouse: Does the spouse work more to make up for the lost income or does the spouse also reduce his or her labor supply in order to take care of the spouse that is diagnosed with cancer? We find the later, that spouses reduce their labor supply and therefore have lowered income levels, which leads to the household having lower income levels as well.”

A spouse’s cancer diagnosis can cause up to a 3.5% reduction in earning for men and up to 6% for women. Additionally, because insurance does not cover family caregiving, the loss of income has a direct impact on the household’s bottom line.

“What we need to think about, in terms of policy implications, is how we can protect not just individuals from the consequences of getting sick, but their entire family. That’s not really something that existing policies do,” Pohl said. “If you think about disability insurance, it’s a function of an individual’s inability to work. It doesn’t take into account that family members might have to take care of an individual and therefore might also lose their job or reduce their working hours and thus their income.”

In contrast with earlier studies, the investigators also found little difference in work reduction between men and women whose spouses have cancer.

“We didn’t find a big difference, although we do see slightly bigger effects in relative terms for wives than for husbands,” Pohl said. “The decline in employment was about 3 percentage points in both cases, but its’ from a lower level among wives because women were less likely to work to begin with. We see that if women have a cancer diagnosis, there are a substantial number of husbands who quit their jobs to take care of their wives and vice-versa. This applies to all age groups.”

Initially the aggressiveness of the cancer does not impact a spouse’s decision to reduce working hours, according to the authors. However, it can change how soon a spouse returns to work.

“If we look at prostate and breast cancer diagnoses, we see that the family income and labor supply pick up again after 2 or 3 years, which is typically the time it takes to treat the cancer,” Pohl said. “With more severe forms, like lung cancer, we see more persistent effects.”

The investigators used administrative data from various sources to measure household income and cancer diagnoses, rather than relying on surveys. Working-age individuals were tracked for 5 years following a cancer diagnosis. The findings indicated how reliable household income is affected by diagnoses.

“Our data allowed us to examine behavior on a level that’s representative for the entire country of Canada,” Pohl said. “We observe annual earnings and income and potential cancer diagnoses for 1.4% of all households in Canada. That’s something no one has been able to do.”

Although the findings are of interest, the effects of the data may not be transferable to the United States because its health care differs from that of other countries.

“One reason why we don’t see that the spouse works more, potentially, is that health insurance is not provided through jobs in Canada,” Pohl said. “In the United States, we could expect that if 1 spouse is diagnosed with a disease, the other spouse has to keep their job in order to keep health insurance for the family.”