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Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs

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  • Nathaniel G. Hilger

Abstract

How do parental layoffs and their large attendant income losses affect children's long-term outcomes? This question has proven difficult to answer due to the endogeneity of parental layoffs. I overcome this problem by exploiting the timing of 7 million fathers' layoffs when children are age 12-29 in administrative data for the United States. Layoffs dramatically reduce family income but only slightly reduce college enrollment, college quality, and early career earnings. These effects are consistent with a weak estimated propensity to spend on college out of marginal parental income. I find that larger effects based on firm closures stem from selection.

Suggested Citation

  • Nathaniel G. Hilger, 2016. "Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 247-283, July.
    • Handle: RePEc:aea:aejapp:v:8:y:2016:i:3:p:247-83
    Note: DOI: 10.1257/app.20150295
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    References listed on IDEAS

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    1. Kartik B. Athreya & Devin Reilly & Nicole B. Simpson, 2010. "Earned income tax credit recipients: income, marginal tax rates, wealth, and credit constraints," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 96(3Q), pages 229-258.
    2. Stephanie Riegg Cellini & Claudia Goldin, 2014. "Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 174-206, November.
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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • 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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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