The impact of parental unemployment on childrens schooling

In the anglo-american countries there is a growing literature concerning various aspects of childrens development (schooling, transitions on the labour market, psychological well-being, health,&). At the same time policies aimed at eradicating childrens poverty are engaged. In France the data used to study childrens development are generally cross-section data rather than panel data. Consequently studies are limited to the outcomes (such as the probability of being held back) of the children who are still living at the parental home. In this paper we use the French survey Budget de Familles 2000-2001, which gives information on the occupational career of the parents. In particular we know if the father has been unemployed for a long time. Moreover we know the education level of every child, even those having left the parental home. The childs outcome we consider here is having got or not the baccalauréat. We show that when the father has been unemployed for a long time the children are less likely to have got the baccalauréat. To control for potential endogeneity, i.e. the fact that fathers unemployment and childs outcome may be simultaneously influenced by unobserved characteristics, we use information on the occupational status of the grand-father, considering that this variable is a predictor of the occupational status of the father without having any direct causal impact on the childrens educational level. Under this assumption, we show that the correlation between fathers unemployment and the childs educational level corresponds to a causal relationship. This means that improving the labour market situation not only have short term impacts for both parents and children but also long term effects on childrens well-being and human capital.