Paternal unemployment during childhood: causal effects on youth worklessness and educational attainment

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Using long-running data from the German Socio-Economic Panel we investigate the impact of paternal unemployment on child labor market and education outcomes. We first describe correlation patterns and then use sibling fixed effects and the Gottschalk (1996) method to identify the causal effects of paternal unemployment. We find different patterns for sons and daughters. Paternal unemployment does not seem to causally affect the outcomes of sons. In contrast, it increases both daughters' worklessness and educational attainment. We test the robustness of the results and explore potential explanations. We thank seminar participants at the BGPE Research Workshop in Augsburg, the University of Sydney, the University of Otago, the ESPE conference in Braga, the cesifo Area conference on the Economics of Education, the EEA conference in Toulouse, the EALE conference in Ljubljana, and our discussant Chris Karbownik for very helpful comments. We are the first to offer evidence for the German case on the long-run effect of paternal unemployment on offspring's educational attainment in general and for daughters specifically. Terms of use: Documents in EconStor mayGermany is particularly interesting as, on the one hand, the OECD advised to increase enrollment in tertiary education (OECD 2012) and, on the other hand, Germany faces low youth 1 The latter argument touches the debate about possible credit constraints on post-secondary education attendance (e.g., Cameron and Taber 2004). Such financial constraints might be more severe in countries with tuition fees, such as the U.S., than in Germany where tertiary education is generally free and costs mainly consist of foregone earnings. 3 unemployment. We take advantage of long running panel data from the German SocioEconomic Panel (SOEP) to investigate correlation and causation patterns. Fixed effects techniques and the Gottschalk (1996) method identify causal relationships.We contribute to the literature in a number of ways. First, this is the first study on the long-run effect of paternal unemployment on educational attainment for Europe. Second, we provide the first study on the intergenerational transmission of unemployment for daughters for Germany. Third, by looking at unemployment and education in one study, we provide a more complete picture on the effect of paternal unemployment. Fourth, given the (mostly data driven) variety in the definition of treatment age in previous studies, we provide systematic evid...

Intergenerational Transmission of Unemployment: Causal Evidence from Austria

“…They find that, although education has an effect on children's unemployment, its effect is independent of the direct effect, which is unaffected by the inclusion of education as an endogenous or exogenous factor. In contrast to Müller et al (2017), the authors further show that a period of six months of parental unemployment during childhood increases unemployment duration by 2.74 percentage points for sons and 0.44 percentage points for daughters between 20 and 54 years of age. Oreopoulos et al (2008) use firm closures in Canada between 1980 and 1982 as instruments for the displacement of fathers and find a positive effect on the unemployment of children between 25 to 33 years of age, driven primarily by poorer families.…”

“…However, the authors use annual industry-specific unemployment risk to instrument the fathers' unemployment (with relatively low explanatory power). In a related study, Müller et al (2017) use the sibling fixed effects and the Gottschalk method on data from the GSOEP and find no effects of paternal unemployment on the outcomes for sons, but they identify positive causal effects on the daughters' worklessness. Interesting insights into whether parents' labor market outcomes have a direct effect on children's labor market outcomes or are channeled through education are provided by Hérault and Kalb (2016) using Australian administrative data.…”

“…The intergenerational transmission of unemployment is a special case of intergenerational mobility. There are at least two other transmission channels with high intergenerational persistence: income (Eriksson et al, 2005;Fan, 2016;Lefgren et al, 2012;Mazumder, 2005) and education (Andersen, 2011;Huang, 2013;Wendelspiess Chávez Juárez, 2015;Müller et al, 2017;Palomino et al, 2019). These factors clearly interact with one another, making it especially hard to disentangle them.…”

Intergenerational effects of further vocational training in Germany

“…Lindemann and Gangl (2017) find negative effects of parents' unemployment specifically on children's transition to vocational training. Müller, Riphahn, and Schwientek (2017) is an exception in finding no or partly positive effects.…”

“…Edmark and Hanspers (2015) similarly find no evidence of a causal effect of parents' welfare benefit receipt. Müller et al (2017) on the other hand find evidence of a causal effect of fathers' unemployment on daughters' but not sons' worklessness and Siedler (2004) and Bratberg, Nilsen, and Vaage (2015) find causal evidence of an intergenerational transmission of welfare benefit receipt.…”