Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2019:7: Consequences of parental job loss on the family environment and on human capital formation - Evidence from plant closures

Eva Mörk (), Anna Sjögren and Helena Svaleryd
Additional contact information
Eva Mörk: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Anna Sjögren: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Helena Svaleryd: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: We study the consequences of mothers’ and fathers’ job loss for parents, families, and children. Rich Swedish register data allow us to identify plant closures and account for non-random selection of workers to closing plants by using propensity score matching and controlling for pre-displacement outcomes. Our overall conclusion is positive: childhood health, educational and early adult outcomes are not adversely affected by parental job loss. Parents and families are however negatively affected in terms of parental health, labor market outcomes and separations. Limited effects on family disposable income suggest that generous unemployment insurance and a dual-earner norm shield families from financial distress, which together with universal health care and free education is likely to be protective for children.

Keywords: Parental unemployment; workplace closure; family environment; child health; human capital formation

JEL-codes: I12; J01

48 pages, August 19, 2019

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