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Children in the Aftermath of the Great Recession

Author

Listed:
  • Andersen, Carsten

    (Aarhus University)

  • Houmark, Mikkel Aagaard

    (Aarhus University)

  • Nielsen, Helena Skyt

    (Aarhus University)

  • Svarer, Michael

    (Aarhus University)

Abstract

In this paper we study effects of mass layoffs on parents and their children in the aftermath of the Great Recession using staggered difference-in-differences (DiD). We exploit quasi-experimental variation in announcements of mass layoffs in Danish firms in 2008-2019. We document that parents exposed to a mass layoff during and immediately after the Great Recession are negatively affected 6 years after the event; more so and for a longer period of time for parents at high risk of long term unemployment. Perhaps surprisingly, we find no overall significant negative effects of parental mass layoffs on children; neither academic achievement, absenteeism nor well-being are affected. We even find some positive effects for the children of parents who were more adversely affected by the layoff, consistent with an increase in parental time investment following unemployment. This last finding would not have appeared using a traditional two-way fixed effects approach, which appears to be biased towards zero in our setting.

Suggested Citation

  • Andersen, Carsten & Houmark, Mikkel Aagaard & Nielsen, Helena Skyt & Svarer, Michael, 2022. "Children in the Aftermath of the Great Recession," IZA Discussion Papers 15389, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15389
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    References listed on IDEAS

    as
    1. Ariel Kalil, 2013. "Effects of the Great Recession on Child Development," The ANNALS of the American Academy of Political and Social Science, , vol. 650(1), pages 232-250, November.
    2. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    3. Patrick Bennett & Amine Ouazad, 2020. "Job Displacement, Unemployment, and Crime: Evidence from Danish Microdata and Reforms [The Link between Human Capital, Mass Layoffs, and Firm Deaths]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2182-2220.
    4. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    5. Nathaniel G. Hilger, 2016. "Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 247-283, July.
    6. Ariel Kalil & Patrick Wightman, 2011. "Parental Job Loss and Children's Educational Attainment in Black and White Middle‐Class Families," Social Science Quarterly, Southwestern Social Science Association, vol. 92(1), pages 57-78, March.
    7. Huttunen, Kristiina & Riukula, Krista, 2019. "Parental Job Loss and Children's Careers," IZA Discussion Papers 12788, Institute of Labor Economics (IZA).
    8. Cantillon, Bea & Chzhen, Yekaterina & Handa, Sudhanshu & Nolan, Brian (ed.), 2017. "Children of Austerity: Impact of the Great Recession on Child Poverty in Rich Countries," OUP Catalogue, Oxford University Press, number 9780198797968.
    9. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    10. Coelli, Michael B., 2011. "Parental job loss and the education enrollment of youth," Labour Economics, Elsevier, vol. 18(1), pages 25-35, January.
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    More about this item

    Keywords

    wellbeing; school outcomes; unemployment; mass layoff; academic achievement;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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