The timing of parental unemployment, insurance and children's education

Abstract

The timing of parental unemployment can impact children's educational transitions. Previous research has mostly examined transitions to higher education, proxying timing in relation to children's age and often focusing on selective populations. We study unemployment's intergenerational effects at multiple stages of the educational career, and define timing relative to important crossroads within and across school years for a broader population of children. Further, we build on suggestive patterns in prior studies and test if and how parental unemployment's effects vary depending on the availability, level, and combination of private insurance (parental wealth) and public insurance (unemployment benefits). We rely on Dutch administrative data on cohorts of students born between 1992 and 1998 and observed around the time of the Great Recession. With a negative-control design, we find that paternal unemployment in 6th grade decreases children's chances of enrolling in the general and academic secondary-school tracks, but only in families with lower wealth. Effects are moderate and partly flow from lower performance in a high-stakes test in 6th grade. These effects are reduced when households receive larger unemployment benefit amounts, particularly above median values. In addition, paternal unemployment in 6th grade has long-term negative effects on postsecondary enrolment for children with lower relative wealth. Differently, we do not find evidence of timing effects for spells of paternal unemployment occurring around high-school graduation, nor when examining the timing of maternal unemployment. These findings can inform remedial interventions aimed at mitigating the negative effects of disruptive events on children's education.