The Sins of the Fathers in Troubled Times: The Long-Term Effect of Parental Unemployment during Recession on Children’s Socioeconomic Achievement

Aleksi Karhula, University of Turku
Hannu Lehti, University of Turku
Jani Erola, University of Turku

We study the intergenerational impact of parental unemployment on the socioeconomic status of the children (ISEI at age of 30) examining whether or not the impact is reduced in the context of deep recession. By contrasting whether parental unemployment was experienced during a period of growth or recession, length of unemployment spell and father’s and mother’s unemployment we further analyze the mechanisms behind the negative effects. We use propensity score matching to analyze high quality Finnish register data, including 15991 children at the age of 12-18. The matching variables include the occupational class and education of parents, whether the parents were divorced or separated and household income before the experienced parental unemployment. Our results show negative effects of parental unemployment that are not significantly reduced at the time of recession. In general the results in the study underline the importance of economic mechanisms behind the negative effects of parental unemployment.