Working Paper: CEPR ID: DP17562
Authors: Diogo Britto; Caique Melo; Breno Sampaio
Abstract: We study the effects of parental job loss on children and how access to unemployment benefits can mitigate these impacts. We leverage unique nationwide data from Brazil linking multiple administrative datasets, and take a comprehensive approach studying impacts on education as well as other key dimensions of children's lives. First, leveraging mass layoffs for identification, we show that parental job loss increases school dropouts and age-grade distortion by up to 1.5 percentage points. These effects are pervasive, last for at least six years and significantly reduce high-school completion rates. Second, we document that other important dimensions of children's lives are affected. Following the layoff, children are more likely to work informally, commit crime, and experience early pregnancy. In turn, parents reduce educational investments by moving children from private to lower-quality public schools. Using a clean regression discontinuity design, we show that access to unemployment benefits effectively mitigates some of the intergenerational impacts of job loss, notably on teenage school dropouts and crime, and on parental investments in school quality. Our findings indicate that the income losses following parental displacement are an important mechanism of the effects on children, highlighting the importance of policies that provide income support for displaced workers.
Keywords: Parental Job Loss; Children's Outcomes; Unemployment Benefits; Education; Crime
JEL Codes: K42; J63; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental job loss (J12) | School dropouts (I21) |
| Parental job loss (J12) | Age-grade distortion (J79) |
| Parental job loss (J12) | Increased informal work (J46) |
| Parental job loss (J12) | Increased crime rates (K42) |
| Parental job loss (J12) | Early pregnancies (J13) |
| Parental job loss (J12) | Reduced educational investments (I21) |
| Parental job loss (J12) | Move from private to lower-quality public schools (I21) |
| Access to unemployment benefits (J65) | Mitigation of negative impacts on teenage school dropouts (I21) |
| Access to unemployment benefits (J65) | Mitigation of negative impacts on crime (K42) |
| Access to unemployment benefits (J65) | Improvement in parental investments in school quality (I21) |