The Long-Term Labor Market Effects of Parental Unemployment

Abstract

I investigate the impact of parental unemployment on children's educational attainment and long-run labor market outcomes in Austria. I find that parental unemployment shortly before an important educational decision by parents for their children lowers a child's probability of holding a university degree by more than 5 percentage points. I do not find that income is affected at the beginning of a child's labor market career along the distribution, but I find a gradual deterioration later on. A substantial share of these long-term losses can be explained by the lower parental investment decision. My results emphasize the intergenerational and longlasting consequences of parental unemployment.

When it Hurts the Most: Timing of Parental Job Loss and a Child's Education

“…While recent studies have focused on the timing of parental job loss with respect to important junctures such as school track choice or labor market entry (Fradkin et al, 2019;Schmidpeter, 2020;Mari et al, 2022), there is little evidence on di erential impacts by the age at which a child is exposed.…”