The Timing of Parental Unemployment, Insurance, and Children's Education

It is not unusual for children to have a parent who faces unemployment at one time or another. Such timing, particularly within the school year, might obstacle children’s educational transitions. We further theorise and test how unemployment’s timing effects vary depending on private and public insurance mechanisms, respectively parental wealth and unemployment benefits. We rely on administrative data from the Netherlands, a country with a stratified educational system and wide wealth disparities, on cohorts of students born between 1992 and 1998, thus covering the late 2000s and early 2010s (> 45,000 paternal/maternal unemployment spells). With a negative control design, we find that a spell of paternal unemployment occurring just before the high-stakes test in 6th grade decreases children’s chances of enrolling in the secondary-school tracks that prepare for Dutch higher education, but only in families with lower wealth. Effects are moderate, amounting to 4 percentage points or 15% of the baseline. Lacking private insurance, these effects reduce (increase) when households receive larger (smaller) unemployment benefit amounts, particularly above median values. Suggestive evidence points to depressed test performance as part of the mechanism at play. For enrolment in postsecondary school, we do not find evidence, differently, that children are more or less affected depending on when parents enter unemployment. Findings can inform when to target remedial interventions, highlighting how and for whom the timing of disruptive events may exert negative intergenerational effects.