IDEAS home Printed from https://ideas.repec.org/a/bla/revinw/v69y2023i4p1060-1087.html
   My bibliography  Save this article

The Intergenerational Effects of Recessions

Author

Listed:
  • Diana Alessandrini
  • Bharat Diwakar

Abstract

Several studies analyze the contemporaneous effects of recessions on individuals and their children. This paper shows that recessions also affect future offspring, not born yet. By linking fathers and offspring from the Panel Study of Income Dynamics, we find that a percentage‐point increase in the national unemployment rate experienced by men between ages 16 and 20 reduces their future offspring's annual wages by 4 percent, occupational prestige by 3 percent, and education by 0.2 years. We then investigate the mechanisms explaining our findings.

Suggested Citation

  • Diana Alessandrini & Bharat Diwakar, 2023. "The Intergenerational Effects of Recessions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(4), pages 1060-1087, December.
    • Handle: RePEc:bla:revinw:v:69:y:2023:i:4:p:1060-1087
    DOI: 10.1111/roiw.12619
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/roiw.12619
    Download Restriction: no
    File URL: https://libkey.io/10.1111/roiw.12619?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Miles Corak & Patrizio Piraino, 2011. "The Intergenerational Transmission of Employers," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 37-68, January.
    2. Harris Dellas & Plutarchos Sakellaris, 2003. "On the cyclicality of schooling: theory and evidence," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 148-172, January.
    3. Alessandrini, Diana, 2018. "Is post-secondary education a safe port and for whom? Evidence from Canadian data," Economics of Education Review, Elsevier, vol. 67(C), pages 1-13.
    4. Douglas Almond & Kenneth Y. Chay & David S. Lee, 2005. "The Costs of Low Birth Weight," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 1031-1083.
    5. Johanna Catherine Maclean & Reginald Covington & Asia Sikora Kessler, 2016. "Labor Market Conditions At School-Leaving: Long-Run Effects On Marriage And Fertility," Contemporary Economic Policy, Western Economic Association International, vol. 34(1), pages 63-88, January.
    6. Raj Chetty & Nathaniel Hendren, 2018. "The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1163-1228.
    7. Coelli, Michael B., 2011. "Parental job loss and the education enrollment of youth," Labour Economics, Elsevier, vol. 18(1), pages 25-35, January.
    8. Brad R. Humphreys, 2000. "Do Business Cycles Affect State Appropriations to Higher Education?," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 398-413, October.
    9. Jo Blanden & Robert Haveman & Timothy Smeeding & Kathryn Wilson, 2014. "Intergenerational Mobility in the United States and Great Britain: A Comparative Study of Parent–Child Pathways," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 425-449, September.
    10. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    11. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    12. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    13. Susan E. Mayer & Leonard M. Lopoo, 2005. "Has the Intergenerational Transmission of Economic Status Changed?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    14. Hershbein Brad J., 2012. "Graduating High School in a Recession: Work, Education, and Home Production," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-32, January.
    15. Steffen Müller & Regina T. Riphahn & Caroline Schwientek, 2017. "Paternal unemployment during childhood: causal effects on youth worklessness and educational attainment," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 213-238.
    16. Maximilian Kasy, 2014. "Instrumental Variables with Unrestricted Heterogeneity and Continuous Treatment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1614-1636.
    17. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, May.
    18. De Cao, Elisabetta & McCormick, Barry & Nicodemo, Catia, 2022. "Does unemployment worsen babies’ health? A tale of siblings, maternal behaviour, and selection," Journal of Health Economics, Elsevier, vol. 83(C).
    19. Daiji Kawaguchi & Ayako Kondo, 2020. "The Effects Of Graduating From College During A Recession On Living Standards," Economic Inquiry, Western Economic Association International, vol. 58(1), pages 283-293, January.
    20. Raj Chetty & Nathaniel Hendren, 2018. "The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1107-1162.
    21. Hannes Schwandt & Till von Wachter, 2019. "Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets," Journal of Labor Economics, University of Chicago Press, vol. 37(S1), pages 161-198.
    22. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
    23. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, July.
    24. Greg J. Duncan & Kenneth T. H. Lee & Maria Rosales-Rueda & Ariel Kalil, 2018. "Maternal Age and Child Development," Demography, Springer;Population Association of America (PAA), vol. 55(6), pages 2229-2255, December.
    25. Fraser Summerfield & Ioannis Theodossiou, 2017. "The Effects Of Macroeconomic Conditions At Graduation On Overeducation," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1370-1387, July.
    26. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    27. Ayako Kondo, 2015. "Differential effects of graduating during a recession across gender and race," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    28. Pedro Carneiro & Italo López García & Kjell G. Salvanes & Emma Tominey, 2021. "Intergenerational Mobility and the Timing of Parental Income," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 757-788.
    29. Carlson, Kyle, 2015. "Fear itself: The effects of distressing economic news on birth outcomes," Journal of Health Economics, Elsevier, vol. 41(C), pages 117-132.
    30. Speer Jamin D., 2016. "Wages, Hours, and the School-to-Work Transition: The Consequences of Leaving School in a Recession for Less-Educated Men," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(1), pages 97-124, January.
    31. Michael S. Christian, 2007. "Liquidity constraints and the cyclicality of college enrollment in the United States," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 141-169, January.
    32. Bingley, Paul & Corak, Miles & Westergård-Nielsen, Niels C., 2011. "The Intergenerational Transmission of Employers in Canada and Denmark," IZA Discussion Papers 5593, Institute of Labor Economics (IZA).
    33. Regmi, Krishna & Henderson, Daniel J., 2019. "Labor Demand Shocks at Birth and Cognitive Achievement during Childhood," IZA Discussion Papers 12521, Institute of Labor Economics (IZA).
    34. Lindo, Jason M., 2011. "Parental job loss and infant health," Journal of Health Economics, Elsevier, vol. 30(5), pages 869-879.
    35. Louis N. Christofides & Michael Hoy & Joniada Milla & Thanasis Stengos, 2022. "Vietnam Era Fathers: The Intergenerational Transmission of Tertiary Education," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(3), pages 593-616, September.
    36. Evelyn Lehrer, 2008. "Age at marriage and marital instability: revisiting the Becker–Landes–Michael hypothesis," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(2), pages 463-484, April.
    37. John Ermisch & Marco Francesconi, 2013. "The Effect Of Parental Employment On Child Schooling," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(5), pages 796-822, August.
    38. Jere R. Behrman & Mark R. Rosenzweig, 2004. "Returns to Birthweight," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 586-601, May.
    39. Katja Maria Kaufmann & Matthias Messner & Alex Solis, 2021. "Elite Higher Education, the Marriage Market and the Intergenerational Transmission of Human Capital," CRC TR 224 Discussion Paper Series crctr224_2021_269, University of Bonn and University of Mannheim, Germany.
    40. Mari Rege & Kjetil Telle & Mark Votruba, 2011. "Parental Job Loss and Children's School Performance," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(4), pages 1462-1489.
    41. Ayako Kondo, 2012. "Gender-specific labor market conditions and family formation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 151-174, January.
    42. Hofmann, Barbara & Hohmeyer, Katrin, 2016. "The effect of the business cycle at college graduation on fertility," Economics of Education Review, Elsevier, vol. 55(C), pages 88-102.
    43. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
    44. Philip Oreopoulos & Kjell G. Salvanes, 2011. "Priceless: The Nonpecuniary Benefits of Schooling," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 159-184, Winter.
    45. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    46. Neel Rao, 2016. "The Impact Of Macroeconomic Conditions In Childhood On Adult Labor Market Outcomes," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1425-1444, July.
    47. Regmi, Krishna & J. Henderson, Daniel, 2019. "Labor demand shocks at birth and cognitive achievement during childhood," Economics of Education Review, Elsevier, vol. 73(C).
    48. Paul Gregg & Lindsay Macmillan & Bilal Nasim, 2012. "The Impact of Fathers’ Job Loss during the 1980s Recession on their Child’s Educational Attainment and Labour Market Outcomes," The Centre for Market and Public Organisation 12/288, The Centre for Market and Public Organisation, University of Bristol, UK.
    49. Chul-In Lee & Gary Solon, 2009. "Trends in Intergenerational Income Mobility," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 766-772, November.
    50. Lindsey Macmillan, 2014. "Intergenerational worklessness in the UK and the role of local labour markets," Oxford Economic Papers, Oxford University Press, vol. 66(3), pages 871-889.
    51. Mario Fiorini & Katrien Stevens, 2021. "Scrutinizing the Monotonicity Assumption in IV and fuzzy RD designs," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(6), pages 1475-1526, December.
    52. José Luis Montiel Olea & Carolin Pflueger, 2013. "A Robust Test for Weak Instruments," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 31(3), pages 358-369, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ubaldi, Michele & Picchio, Matteo, 2023. "Intergenerational scars: The impact of parental unemployment on individual health later in life," GLO Discussion Paper Series 1271, Global Labor Organization (GLO).
    2. Paul Bingley & Lorenzo Cappellari & Marco Ovidi, 2023. "When it hurts the most: timing of parental job loss and a child’s education," LISER Working Paper Series 2023-12, Luxembourg Institute of Socio-Economic Research (LISER).
    3. Choi, Eleanor Jawon & Choi, Jaewoo & Son, Hyelim, 2020. "The long-term effects of labor market entry in a recession: Evidence from the Asian financial crisis," Labour Economics, Elsevier, vol. 67(C).
    4. Eleanor Jawon Choi & Jaewoo Choi & Hyelim Son, 2019. "The Long-Term Effects of Labor Market Entry in a Recession: Evidence from the Asian Financial Crisis," Upjohn Working Papers 19-312, W.E. Upjohn Institute for Employment Research.
    5. Martti Kaila & Emily Nix & Krista Riukula, 2021. "Disparate Impacts of Job Loss by Parental Income and Implications for Intergenerational Mobility," Opportunity and Inclusive Growth Institute Working Papers 53, Federal Reserve Bank of Minneapolis.
    6. Yonghong An & Wang Le & Ruli Xiao, 2015. "Your American Dream is Not Mine! A New Approach to Estimating Intergenerational Mobility Elasticities," CAEPR Working Papers 2015-016, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    7. Eleanor J. Choi & Jaewoo Choi & Hyelim Son, 2020. "The Long-Term Effects of Labor Market Entry in a Recession: Evidence from the Asian Financial Crisis," Working Papers 637, Princeton University, Department of Economics, Industrial Relations Section..
    8. Choi, Eleanor J. & Choi, Jaewoo & Son, Hyelim, 2020. "The Long-Term Effects of Labor Market Entry in a Recession: Evidence from the Asian Financial Crisis," IZA Discussion Papers 13009, Institute of Labor Economics (IZA).
    9. Rasmus Landersø & James J. Heckman, 2017. "The Scandinavian Fantasy: Sources of Intergenerational Mobility in Denmark and the US," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 178-230, January.
    10. Gianni De Fraja & Sara Lemos & James Rockey, 2021. "The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment," Economica, London School of Economics and Political Science, vol. 88(352), pages 896-941, October.
    11. Winter-Ebmer, Rudolf & Grübl, Dominik & Lackner, Mario, 2020. "Intergenerational Transmission of Unemployment - Causal Evidence from Austria," CEPR Discussion Papers 14505, C.E.P.R. Discussion Papers.
    12. Duque, Valentina & Schmitz, Lauren L., 2020. "The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression," Working Papers 2020-11, University of Sydney, School of Economics.
    13. Michelle M. Miller & Frank McIntyre, 2020. "Does Money Matter for Intergenerational Income Transmission?," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 941-970, January.
    14. Chong Lu, 2022. "The effect of migration on rural residents’ intergenerational subjective social status mobility in China," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 3279-3308, October.
    15. Dodin, Majed & Findeisen, Sebastian & Henkel, Lukas & Sachs, Dominik & Schüle, Paul, 2024. "Social mobility in Germany," Journal of Public Economics, Elsevier, vol. 232(C).
    16. Patrick Bennett, 2021. "The Work-To-School Transition: Job Displacement and Skill Upgrading among Young High School Dropouts," CESifo Working Paper Series 9417, CESifo.
    17. Braxton, John Carter & Chikhale, Nisha & Herkenhoff, Kyle & Phillips, Gordon, 2024. "Intergenerational Mobility and Credit," IZA Discussion Papers 16826, Institute of Labor Economics (IZA).
    18. Chen, Wen-Hao & Ostrovsky, Yuri & Piraino, Patrizio, 2017. "Lifecycle variation, errors-in-variables bias and nonlinearities in intergenerational income transmission: new evidence from Canada," Labour Economics, Elsevier, vol. 44(C), pages 1-12.
    19. Galassi, Gabriela & Koll, David & Mayr, Lukas, 2019. "The Intergenerational Correlation of Employment: Is There a Role for Work Culture?," IZA Discussion Papers 12595, Institute of Labor Economics (IZA).
    20. Mattias Engdahl & Mathilde Godard & Oskar Nordström Skans, 2024. "Early Labor Market Prospects and Family Formation," Journal of Human Resources, University of Wisconsin Press, vol. 59(5), pages 1564-1598.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:revinw:v:69:y:2023:i:4:p:1060-1087. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.