Essays on parental labor market characteristics and the academic outcomes of their offspring

Defence date: 5 December 2014Examining Board: Professor Andrea Ichino, European University Institute (Supervisor); Professor Jérôme Adda, European University Institute and Bocconi University; Professor Libertad González Luna, Universitat Pompeu Fabra; Professor Peter Skogman Thoursie, Stockholm University.This thesis examines the impact of parental job loss and parental job insecurity on several academic outcomes of their offspring. Recent evidence has shown that parental job loss negatively influences the school performance of their offspring. Chapter 2 uses an original dataset I collected myself (described in Chapter 1) to study the effect of parental job loss on children's school performance during the Great Recession in Spain. Conditioning on student fixed effects and observed covariates, the Great Recession generates variation in job loss that could be considered analogous to that provided by randomisation. The results show that after father's job loss, students experience a negative and significant decrease on average grades of about 13 to 19% of a standard deviation. This effect remains unaltered once the impact of mother's job loss on grades is accounted for. Interestingly, maternal job loss has no significant effect on the school performance of her offspring. Moreover, school performance prior to father's job loss is not affected by future job losses, reinforcing the causal interpretation of the link between father's job loss and children's educational outcomes. Finally, the impact of paternal job loss is not homogeneous across students, but it is rather largely concentrated among children whose fathers suffer long unemployment spells after job loss and those students in already disadvantaged families in terms of the level of education of the father. Therefore, these results are pointing out a mechanism (paternal job loss) through which further inequalities might develop during and after a deep economic crisis. Chapter 3 uses exogenous variation in regional labour market policies in Spain to identify the impact of paternal job insecurity on the students' probability of graduating from compulsory education on time. Using data from the Spanish Labour Force Survey, average marginal effects and local average treatment effects (LATE) are estimated. Results indicate that students whose fathers hold a permanent contract (as opposed to a temporary, fixed-term contract) the year they should graduate from compulsory education are, on average, 7 percentage points more likely to graduate on time. LATE estimates are considerably higher, suggesting that those students whose fathers obtained a permanent contract as a result of the availability of regional subsidies reaped bigger benefits from paternal job stability. These results hold when maternal job insecurity is also accounted for, and they are concentrated on male students. Importantly, these findings seem to indicate that the pervasive effects of temporary contracts found elsewhere in the literature go beyond the employees and affect negatively their children's educational outcomes