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Parental earnings response to children's job loss: Evidence from Finland

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  • Haapanen, Mika
  • Pehkonen, Jaakko
  • Seppälä, Ville

Abstract

This study investigates how job displacement among adult children affects their parents’ earnings using population-based data from Finland. The research utilizes plant closures during the 1991–1994 recession as exogenous shocks to identify causal effects. Our results show that an adult child's job loss leads to increased parental earnings, particularly two to five years post-displacement, but the effect size gradually diminishes over time. The effects are pronounced among older parents and male parents. This study contributes to the literature on intergenerational economic spillovers and highlights the role of parents’ altruism and economic behavior in response to children's job displacement.

Suggested Citation

  • Haapanen, Mika & Pehkonen, Jaakko & Seppälä, Ville, 2025. "Parental earnings response to children's job loss: Evidence from Finland," Labour Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:labeco:v:94:y:2025:i:c:s0927537125000417
    DOI: 10.1016/j.labeco.2025.102714
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    Keywords

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    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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