Parental Job Loss and Children’s Socioeconomic Disadvantage

Using high-quality administrative data, we study how parental labor market shocks affect children’s socioeconomic disadvantage. We find that the job loss of both fathers and mothers significantly increases the likelihood that children will experience a range of socioeconomic disadvantage indicators in adulthood, including being not in education, employment, or training (NEET), reliance on social assistance, and the use of unemployment benefits. In relative terms, we find that parental job loss increases children’s risk of socioeconomic disadvantage by up to 4.5% for sons and up to 3.9% for daughters. These effects persist for more than a decade after parental job displacement. The adverse impacts are particularly pronounced for boys and children exposed at older ages, suggesting heterogeneous vulnerability based on gender and developmental stage. Our results indicate that good labor market conditions – particularly in the case of fathers – may mitigate the adverse effects of parental job loss.