Intergenerational scars? The long-term effects of parental unemployment during a depression

Abstract

We studied the intergenerational impact of parental unemployment on the socioeconomic status of children. We used data from the Finnish depression of the 1990s, one of the deepest depressions in the history of OECD countries. We compared the impact of parental unemployment of children aged 12-18 during both a period of economic growth and a period of depression. We used ISEI status to measure social status when the children reached the age of 30. We used propensity score matching to analyse the high-quality Finnish register data, comprising 15991 children. Our results show a negative association between parental unemployment and children’s later socioeconomic status that is not significantly lower when parental unemployment occurs during a depression. The association is partially driven by the duration of unemployment during the depression. Our results underline the importance of providing support to families that experience parental unemployment during eras of both depression and growth.