Parental Job Loss and Children’s Socioeconomic Disadvantage

Using high-quality administrative data, we study how parental labor market shocksaffect children’s socioeconomic disadvantage. We find that the job loss of both fathersand mothers significantly increases the likelihood that children will experiencea range of socioeconomic disadvantage indicators in adulthood, including being notin education, employment, or training (NEET), reliance on social assistance, and theuse of unemployment benefits. In relative terms, we find that parental job loss increaseschildren’s risk of socioeconomic disadvantage by up to 4.5% for sons and upto 3.9% for daughters. These effects persist for more than a decade after parental jobdisplacement. The adverse impacts are particularly pronounced for boys and childrenexposed at older ages, suggesting heterogeneous vulnerability based on genderand developmental stage. Our results indicate that good labor market conditions –particularly in the case of fathers – may mitigate the adverse effects of parental jobloss.