Applied Economics Letters

Using data from three waves of the China Health and Retirement Longitudinal Study, this study identifies a causal effect of the distance adult children reside from their parents on the mental health of the rural elderly. We use panel correlated random effect methods with instrumental variables to address potential confounding effects of reverse causality and unobserved omitted variables. We find that the impact of the distance adult children live from their parents on parental mental health exhibits an inverted ‘U-shaped’ pattern that first increases (good) and then slowly decreases (poor). Further analysis finds that the effect of the residence distance on the mental health of rural elderly has statistically significant differences by gender of the elderly. Submitted version