Ruhr Economic Papers

Ruhr Economic Papers #866

The Long-Term Labor Market Effects of Parental Unemployment

by Bernhard Schmidpeter

RWI, 09/2020, 60 S./p., 10 Euro, ISBN 978-3-96973-003-4 DOI: 10.4419/96973003



I investigate the impact of parental unemployment on children’s educational attainment and long-run labor market outcomes in Austria. I find that parental unemployment shortly before an important educational decision by parents for their children lowers a child’s probability of holding a university degree by more than 5 percentage points. I do not find that income is affected at the beginning of a child’s labor market career along the distribution, but I find a gradual deterioration later on. A substantial share of these long-term losses can be explained by the lower parental investment decision. My results emphasize the intergenerational and longlasting consequences of parental unemployment.

JEL-Classification: C21, I23, J13, J31,

Keywords: Parental unemployment; intergenerational effects; long-term effects; unemployment; wage loss; decomposition